EN BANC

[G.R. No. 133250. July 9,

2002.]

FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and

AMARI COASTAL BAY DEVELOPMENT CORPORATION , respondents.

DECISION

CARPIO, J :

This is an original Petition for Mandamus with prayer for a writ of

preliminary injunction and a temporary restraining order. The petition seeks to
compel the Public Estates Authority ("PEA" for brevity) to disclose all facts on
PEA's then on-going renegotiations with Amari Coastal Bay and Development Corporation
("AMARI" for brevity) to reclaim portions of Manila Bay. The petition further seeks to
enjoin PEA from signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public
Highways, signed a contract with the Construction and Development Corporation of the
Philippines ("CDCP' for brevity) to reclaim certain foreshore and offshore areas of Manila
Bay. The contract also included the construction of Phases I and II of the Manila-Cavite
Coastal Road. CDCP obligated itself to carry out all the works in consideration of @fty
percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree
No. 1084 creating PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and
submerged areas," and "to develop, improve, acquire, . . . lease and sell any and all kinds
of lands." 1 On the same date, then President Marcos issued Presidential Decree No. 1085
transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila Bay "
2 under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

On December 29, 1981, then President Marcos issued a memorandum directing

PEA to amend its contract with CDCP, so that "[A]ll future works in MCCRRP . . . shall be
funded and owned by PEA." Accordingly, PEA and CDCP executed a Memorandum of
Agreement dated December 29, 1981, which stated:
"(i) CDCP shall undertake all reclamation, construction, and such
other works in the MCCRRP as may be agreed upon by the parties, to be paid
according to progress of works on a unit price/lump sum basis for items of
work to be agreed upon, subject to price escalation, retention and other
terms and conditions provided for in Presidential Decree No. 1594. All the
@nancing required for such works shall be provided by PEA.
xxx xxx xxx

(iii) . . . CDCP shall give up all its development rights and

hereby agrees to cede and transfer in favor of PEA, all of the rights, title,
interest and
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 participation of CDCP in and to all the areas of land reclaimed by CDCP in the
MCCRRP as of December 30, 1981 which have not yet been sold, transferred
or otherwise disposed of by CDCP as of said date, which areas consist
of approximately Ninety-Nine Thousand Four Hundred Seventy Three
(99,473) square meters in the Financial Center Area covered by land pledge
No. 5 and approximately Three Million Three Hundred Eighty Two Thousand
Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at
varying elevations above Mean Low Water Level located outside the Financial
Center Area and the First Neighborhood Unit." 3
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No.
3517, granting and transferring to PEA "the parcels of land so reclaimed under the Manila-
Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total area of one
million nine hundred @fteen thousand eight hundred ninety four (1,915,894)
square meters." Subsequently, on April 9, 1988, the Register of Deeds of the
Municipality of Parañaque issued Transfer Certi@cates of Title Nos. 7309, 7311, and
7312, in the name of PEA, covering the three reclaimed islands known as the "Freedom
Islands" located at the southern portion of the Manila-Cavite Coastal Road, Parañaque
City. The Freedom Islands have a total land area of One Million Five Hundred Seventy
Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841
hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity)
with AMARI, a private corporation, to develop the Freedom Islands. The JVA also required
the reclamation of an additional 250 hectares of submerged areas surrounding
these islands to complete the con@guration in the Master Development Plan of the
Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through
negotiation without public bidding. 4 On April 28, 1995, the Board of Directors of PEA, in
its Resolution No. 1245, con@rmed the JVA. 5 On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the JVA. 6
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege
speech in the Senate and denounced the JVA as the "grandmother of all scams." As a
result, the Senate Committee on Government Corporations and Public Enterprises, and
the Committee on Accountability of Public OJcers and Investigations, conducted a
joint investigation. The Senate Committees reported the results of their investigation in
Senate Committee Report No. 560 dated September 16, 1997. 7 Among the conclusions of
their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA
are lands of the public domain which the government has not classi@ed as alienable lands
and therefore PEA cannot alienate these lands; (2) the certi@cates of title
covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued
Presidential Administrative Order No. 365 creating a Legal Task Force to conduct a
study on the legality of the JVA in view of Senate Committee Report No. 560. The
members of the Legal Task Force were the Secretary of Justice, 8 the Chief Presidential
Legal Counsel, 9 and the Government Corporate Counsel. 10 The Legal Task Force upheld
the legality of the JVA, contrary to the conclusions reached by the Senate Committees. 11
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports
that there were on-going renegotiations between PEA and AMARI under an order issued by
then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw,
PEA Chairman Arsenio Yulo and retired Navy OJcer Sergio Cruz composed the
negotiating panel of PEA.
 On April 13, 1998, Antonio M. Zulueta @led before the Court a Petition for
Prohibition with Application for the Issuance of a Temporary Restraining Order and
Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court
dismissed the petition "for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court." 12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer,
@led the instant Petition for Mandamus with Prayer for the Issuance of a Writ
of Preliminary Injunction and Temporary Restraining Order. Petitioner contends
the government stands to lose billions of pesos in the sale by PEA of the reclaimed lands
to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of
the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution
on the right of the people to information on matters of public concern. Petitioner assails
the sale to AMARI of lands of the public domain as a blatant violation of Section 3, Article
XII of the
1987 Constitution prohibiting the sale of alienable lands of the public domain to private
corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of
pesos in properties of the State that are of public dominion.
After several motions for extension of time, 13 PEA and AMARI @led their Comments
on October 19, 1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998,
petitioner @led an Omnibus Motion: (a) to require PEA to submit the terms of
the renegotiated PEA-AMARI contract; (b) for issuance of a temporary restraining order;
and (c) to set the case for hearing on oral argument. Petitioner @led a Reiterative Motion
for Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution dated
June
22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition
and required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement
("Amended JVA," for brevity). On May 28, 1999, the OJce of the President under the
administration of then President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the OJce of the President, petitioner
now prays that on "constitutional and statutory grounds the renegotiated contract
be declared null and void." 14
The Issues
The issues raised by petitioner, PEA 15 and AMARI 16 are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE
MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE
THE PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;

V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES

OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL
AGREEMENT;
 VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE
AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS,
RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987
CONSTITUTION; AND

VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE
OF WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.

The Court's Ruling

First issue: whether the principal reliefs prayed for in the petition are moot
and academic because of subsequent events.

The petition prays that PEA publicly disclose the "terms and conditions of the on-
going negotiations for a new agreement." The petition also prays that the Court enjoin
PEA from "privately entering into, perfecting and/or executing any new agreement with
AMARI.
"PEA and AMARI claim the petition is now moot and academic because
AMARI furnished petitioner on June 21, 1999 a copy of the signed Amended JVA
containing the terms and conditions agreed upon in the renegotiations. Thus, PEA
has satis@ed petitioner's prayer for a public disclosure of the renegotiations.
Likewise, petitioner's prayer to enjoin the signing of the Amended JVA is now moot
because PEA and AMARI have already signed the Amended JVA on March 30, 1999.
Moreover, the OJce of the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by
simply fast-tracking the signing and approval of the Amended JVA before the Court could
act on the issue. Presidential approval does not resolve the constitutional issue or remove
it from the ambit of judicial review.
We rule that the signing and of the Amended JVA by PEA and AMARI and
its approval by the President cannot operate to moot the petition and divest the Court of
its jurisdiction. PEA and AMARI have still to implement the Amended JVA. The prayer to
enjoin the signing of the Amended JVA on constitutional grounds necessarily includes
preventing its implementation if in the meantime PEA and AMARI have signed one in
violation of the Constitution. Petitioner's principal basis in assailing the renegotiation of
the JVA is its violation of the Section 3, Article XII of the Constitution, which prohibits the
government from alienating lands of the public domain to private corporations. If the
Amended JVA indeed violates the Constitution, it is the duty of the Court to enjoin its
implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to
transfer title and ownership to 367.5 hectares of reclaimed lands and submerged areas of
Manila Bay to a single private corporation. It now becomes more compelling for the Court
to resolve the issue too insure the government itself does not violate a provision of the
Constitution intended to safeguard the national patrimony. Supervening events whether
intended or accidental, cannot prevent the Court from rendering a decision if there is a
grave violation of the Constitution. In the instant case, if the Amended JVA runs counter
to the Constitution, the Court can still prevent the transfer of title and ownership of
alienable lands of the public domain in the name of AMARI. Even in cases where
supervening events had made the cases moot, the Court did not hesitate to resolve the
legal or constitutional issues raised to formulate controlling principles to guide the
bench, bar, and the public. 17
 Also, the instant petition is a case of @rst impression. All previous decisions of the
Court involving Section 3, Article XII of the 1987 Constitution, or its counterpart provision
in the 1973 Constitution, 18 covered agricultural lands sold to private corporations which
acquired the lands from private parties. The transferors of the private
corporations claimed or could claim the right to judicial con@rmation of their imperfect
titles 19 under Title II of Commonwealth Act. 141 ("CA No. 141" for brevity). In the instant
case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands and
submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of
PEA) and Title III of CA No. 141. Certain undertakings by AMARI under the Amended
JVA constitute the consideration for the purchase. Neither AMARI nor PEA can claim
judicial con@rmation of their titles because the lands covered by the Amended JVA are
newly reclaimed or still to be reclaimed. Judicial con@rmation of imperfect title requires
open, continuous, exclusive and notorious occupation of agricultural lands of the public
domain for at least thirty years since June 12, 1945 or earlier. Besides, the deadline
for @ling applications for judicial confirmation of imperfect title expired on December
31, 1987. 20
Lastly, there is a need to resolve immediately the constitutional issue raised in this
petition because of the possible transfer at any time by PEA to AMARI of title
and ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is
obligated to transfer to AMARI the latter's seventy percent proportionate share in the
reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI to
mortgage at any time the entire reclaimed area to raise financing for the reclamation
project. 21
Second issue: whether the petition merits dismissal for failing to observe the
principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking
relief directly from the Court. The principle of hierarchy of courts applies generally to
cases involving factual questions. As it is not a trier of facts, the Court cannot entertain
cases involving factual issues. The instant case, however, raises constitutional
issues of transcendental importance to the public. 22 The Court can resolve this
case without determining any factual issue related to the case. Also, the instant case is a
petition for mandamus which falls under the original jurisdiction of the Court under
Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over
the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose
publicly certain information without @rst asking PEA the needed information. PEA claims
petitioner's direct resort to the Court violates the principle of exhaustion of
administrative remedies. It also violates the rule that mandamus may issue only if there is
no other plain, speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Tañada v. Tuvera 23 where the Court
granted the petition for mandamus even if the petitioners there did not initially demand
from the OJce of the President the publication of the presidential decrees. PEA points
out that in Tañada, the Executive Department had an aJrmative statutory duty under
Article 2 of the Civil Code 24 and Section 1 of Commonwealth Act No. 638 25 to
publish the presidential decrees. There was, therefore, no need for the petitioners in
Tañada to make an initial demand from the OJce of the President. In the instant case,
PEA claims it has no aJrmative statutory duty to disclose publicly information about its
renegotiation of the JVA. Thus, PEA asserts that the Court must apply the principle
of exhaustion of
administrative remedies to the instant case in view of the failure of petitioner here
to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a
government corporation. Under Section 79 of the Government Auditing Code, 26
the disposition of government lands to private parties requires public bidding. PEA was
under a positive legal duty to disclose to the public the terms and conditions for the sale
of its lands. The law obligated PEA make this public disclosure even without
demand from petitioner or from anyone. PEA failed to make this public disclosure
because the original JVA, like the Amended JVA, was the result of a negotiated contract,
not of a public bidding. Considering that PEA had an aJrmative statutory duty to make the
public disclosure, and was even in breach of this legal duty, petitioner had the
right to seek direct judicial intervention.
Moreover, and this alone, is determinative of this issue, the principle of exhaustion
of administrative remedies does not apply when the issue involved is a purely
legal or constitutional question. 27 The principal issue in the instant case is the capacity
of AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the
alienation of lands of the public domain to private corporations. We rule that the
principle of exhaustion of administrative remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit.
PEA argues that petitioner has no standing to institute mandamus proceedings to
enforce his constitutional right to information without a showing that PEA refused
to perform an aJrmative duty imposed on PEA by the Constitution. PEA also claims that
petitioner has not shown that he will suffer any concrete injury because of the signing or
implementation of the Amended JVA. Thus, there is no actual controversy requiring the
exercise of the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because the petition seeks
to compel PEA to comply with its constitutional duties. There are two constitutional
issues involved here. First is the right of citizens to information on matters of public
concern. Second is the application of a constitutional provision intended to insure the
equitable distribution of alienable lands of the public domain among Filipino citizens. The
thrust of the @rst issue is to compel PEA to disclose publicly information on the sale of
government lands worth billions of pesos, information which the Constitution and
statutory law mandate PEA to disclose. The thrust of the second issue is to prevent PEA
from alienating hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a constitutional duty to the
nation.
Moreover, the petition raises matters of transcendental importance to the public.
In Chavez v. PCGG, 28 the Court upheld the right of a citizen to bring a taxpayer's suit on
matters of transcendental importance to the public, thus —
"Besides, petitioner emphasizes, the matter of recovering the ill-
gotten wealth of the Marcoses is an issue of 'transcendental importance to
the public.' He asserts that ordinary taxpayers have a right to initiate and
prosecute actions questioning the validity of acts or orders of
government agencies or instrumentalities, if the issues raised are of
'paramount public interest,' and if they
'immediately affect the social, economic and moral well-being of the people.'
 Moreover, the mere fact that he is a citizen satis@es the requirement
of personal interest, when the proceeding involves the assertion of a public
right,
 such as in this case. He invokes several decisions of this Court which have set
aside the procedural matter of locus standi, when the subject of the case
involved public interest.

xxx xxx xxx

In Tañada v. Tuvera , the Court asserted that when the issue concerns
a public right and the object of mandamus is to obtain the enforcement of a
public duty, the people are regarded as the real parties in interest; and
because it is suJcient that petitioner is a citizen and as such is interested in
the execution of the laws, he need not show that he has any legal or special
interest in the result of the action. In the aforesaid case, the petitioners
sought to enforce their right to be informed on matters of public concern, a
right then recognized in Section 6, Article IV of the 1973 Constitution, in
connection with the rule that laws in order to be valid and enforceable
must be published in the OJcial Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court
declared that the right they sought to be enforced 'is a public right
recognized by no less than the fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating Tañada,
further declared that 'when a mandamus proceeding involves the assertion of
a public right, the requirement of personal interest is satis@ed by the
mere fact that petitioner is a citizen and, therefore, part of the general
'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public
funds may not have been involved under the questioned contract for the
development, management and operation of the Manila International
Container Terminal,
'public interest [was] de@nitely involved considering the important role
[of the subject contract] . . . in the economic development of the
country and the magnitude of the @nancial consideration involved.' We
concluded that, as a consequence, the disclosure provision in the
Constitution would constitute sufficient authority for upholding the
petitioner's standing.
Similarly, the instant petition is anchored on the right of the
people to information and access to oJcial records, documents and
papers — a right guaranteed under Section 7, Article III of the 1987
Constitution. Petitioner, a former solicitor general, is a Filipino citizen.
Because of the satisfaction of the two basic requisites laid down by
decisional law to sustain petitioner's legal standing, i.e. (1) the
enforcement of a public right (2) espoused by a Filipino citizen, we rule
that the petition at bar should be allowed."
We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights — to information and to the equitable diffusion of
natural resources
— matters of transcendental public importance, the petitioner has the requisite
locus
standi.
Fifth issue: whether the constitutional right to information includes official
information on on-going negotiations before a final agreement.
 Section 7, Article III of the Constitution explains the people's right to information
on matters of public concern in this manner:
"Sec. 7. The right of the people to information on matters of
public concern shall be recognized. Access to oJcial records, and to
documents, and papers pertaining to oJcial acts, transactions, or,
decisions, as well as to
 government research data used as basis for policy development, shall
be afforded the citizen, subject to such limitations as may be provided
by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest
reinforces the people's right to information on matters of public concern. This State
policy is expressed in Section 28, Article II of the Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed by law, the
State adopts and implements a policy of full public disclosure of all its
transactions involving public interest." (Italics supplied)
These twin provisions of the Constitution seek to promote transparency in
policy- making and in the operations of the government, as well as provide the
people suJcient information to exercise effectively other constitutional rights.
These twin provisions are essential to the exercise of freedom of expression. If the
government does not disclose its oJcial acts, transactions and decisions to
citizens, whatever citizens say, even if expressed without any restraint, will be
speculative and amount to nothing. These twin provisions are also essential to hold
public oJcials "at all times . . . accountable to the people," 29 for unless citizens
have the proper information, they cannot hold public oJcials accountable for
anything. Armed with the right information, citizens can participate in public
discussions leading to the formulation of government policies and their effective
implementation. An informed citizenry is essential to the existence and proper
functioning of any democracy. As explained by the Court in Valmonte v.
Belmonte, Jr. 30 —
"An essential element of these freedoms is to keep open a
continuing dialogue or process of communication between the government
and the people. It is in the interest of the State that the channels for free
political discussion be maintained to the end that the government may
perceive and be responsive to the people's will. Yet, this open dialogue can
be effective only to the extent that the citizenry is informed and thus able to
formulate its will intelligently. Only when the participants in the discussion
are aware of the issues and have access to information relating thereto
can such bear fruit."

PEA asserts, citing Chavez v. PCGG, 31 that in cases of on-going negotiations the
right to information is limited to "de@nite propositions of the government." PEA maintains
the right does not include access to "intra-agency or inter-agency recommendations or
communications during the stage when common assertions are still in the process of
being formulated or are in the 'exploratory stage.'"
Also AMARI contends that petitioner cannot invoke the right at the pre-decisional
stage or before the closing of the transaction. To support its contention, AMARI cites the
following discussion in the 1986 Constitutional Commission:
"Mr. Suarez. And when we say 'transactions' which should be
distinguished from contracts, agreements, or treaties or whatever, does the
Gentleman refer to the steps leading to the consummation of the contract,
or does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic and
therefore, it can cover both steps leading to a contract and already
consummated contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the
 consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the
national interest.
Mr. Suarez: Thank you." 32 (Italics supplied)
AMARI argues there must @rst be a consummated contract before petitioner
can invoke the right. Requiring government oJcials to reveal their deliberations at the
pre- decisional stage will degrade the quality of decision-making in government
agencies. Government oJcials will hesitate to express their real sentiments during
deliberations if there is immediate public dissemination of their discussions, putting
them under all kinds of pressure before they decide.
We must @rst distinguish between information the law on public bidding requires
PEA to disclose publicly, and information the constitutional right to information requires
PEA to release to the public. Before the consummation of the contract, PEA must, on its
own and without demand from anyone, disclose to the public matters relating to
the disposition of its property. These include the size, location, technical
description and nature of the property being disposed of, the terms and conditions of the
disposition, the parties quali@ed to bid, the minimum price and similar information. PEA
must prepare all these data and disclose them to the public at the start of the disposition
process, long before the consummation of the contract, because the Government
Auditing Code requires public bidding. If PEA fails to make this disclosure, any citizen
can demand from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being
undertaken by the bidding or review committee is not immediately accessible under the
right to information. While the evaluation or review is still on-going, there are no "oJcial
acts, transactions, or decisions" on the bids or proposals. However, once the committee
makes its oJcial recommendation, there arises a "de@nite proposition" on the part of the
government. From this moment, the public's right to information attaches, and any
citizen can access all the non-proprietary information leading to such de@nite
proposition. In Chavez v. PCGG, 33 the Court ruled as follows:
"Considering the intent of the framers of the Constitution, we
believe that it is incumbent upon the PCGG and its oJcers, as well as other
government representatives, to disclose suJcient public informations on
any proposed settlement they have decided to take up with the ostensible
owners and holders of ill-gotten wealth. Such information though, must
pertain to de@nite propositions of the government, not necessarily
to intra-agency or inter-agency recommendations or communications
during the stage when common assertions are still in the process of being
formulated or are in the "exploratory" stage. There is need, of course, to
observe the same restrictions on disclosure of information in general, as
discussed earlier — such as on matters involving national security, diplomatic
or foreign relations, intelligence and other classi@ed information."
(Italics supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional
Commission understood that the right to information "contemplates inclusion of
negotiations leading to the consummation of the transaction." Certainly, a consummated
contract is not a requirement for the exercise of the right to information. Otherwise, the
people can never exercise the right if no contract is consummated, and if one is
consummated, it may be too late for the public to expose its defects.
 Requiring a consummated contract will keep the public in the dark until the
contract, which may be grossly disadvantageous to the government or even illegal,
becomes a fait accompli. This negates the State policy of full transparency on matters of
public concern, a situation which the framers of the Constitution could not have
intended. Such a requirement will prevent the citizenry from participating in the public
discussion of any proposed contract, effectively truncating a basic right enshrined in the
Bill of Rights. We can allow neither an emasculation of a constitutional right, nor a
retreat by the State of its avowed "policy of full disclosure of all its transactions involving
public interest."
The right covers three categories of information which are "matters of
public concern," namely: (1) oJcial records; (2) documents and papers pertaining to
oJcial acts, transactions and decisions; and (3) government research data used in
formulating policies. The @rst category refers to any document that is part of the public
records in the custody of government agencies or oJcials. The second category refers to
documents and papers recording, evidencing, establishing, con@rming, supporting,
justifying or explaining oJcial acts, transactions or decisions of government agencies or
oJcials. The third category refers to research data, whether raw, collated or processed,
owned by the government and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA
includes evaluation reports, recommendations, legal and expert opinions, minutes
of meetings, terms of reference and other documents attached to such reports or
minutes, all relating to the JVA. However, the right to information does not
compel PEA to prepare lists, abstracts, summaries and the like relating to the
renegotiation of the JVA. 34 The right only affords access to records, documents and
papers, which means the opportunity to inspect and copy them. One who exercises
the right must copy the records, documents and papers at his expense. The exercise
of the right is also subject to reasonable regulations to protect the integrity of the
public records and to minimize disruption to government operations, like rules specifying
when and how to conduct the inspection and copying. 35
The right to information, however, does not extend to matters recognized
as privileged information under the separation of powers. 36 The right does not also apply
to information on military and diplomatic secrets, information affecting national security,
and information on investigations of crimes by law enforcement agencies before
the prosecution of the accused, which courts have long recognized as con@dential. 37
The right may also be subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged
information rooted in the separation of powers. The information does not cover
Presidential conversations, correspondence, or discussions during closed-door Cabinet
meetings which, like internal deliberations of the Supreme Court and other
collegiate courts, or executive sessions of either house of Congress, 38 are
recognized as con@dential. This kind of information cannot be pried open by a
co-equal branch of government. A frank exchange of exploratory ideas and assessments,
free from the glare of publicity and pressure by interested parties, is essential to protect
the independence of decision-making of those tasked to exercise Presidential, Legislative
and Judicial Power.
39 This is not the situation in the instant case.

We rule, therefore, that the constitutional right to information includes

oJcial information on on-going negotiations before a @nal contract. The information,
however, must constitute de@nite propositions by the government and should not cover
recognized
exceptions like privileged information, military and diplomatic secrets and similar
matters affecting national security and public order. 40 Congress has also prescribed
other limitations on the right to information in several legislations. 41
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI
of lands, reclaimed or to be reclaimed, violate the Constitution.
The Regalian
Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in
the Regalian doctrine which holds that the State owns all lands and waters of the public
domain. Upon the Spanish conquest of the Philippines, ownership of all "lands, territories
and possessions" in the Philippines passed to the Spanish Crown. 42 The King, as the
sovereign ruler and representative of the people, acquired and owned all lands
and territories in the Philippines except those he disposed of by grant or sale to
private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian
doctrine substituting, however, the State, in lieu of the King, as the owner of all lands
and waters of the public domain. The Regalian doctrine is the foundation of the
time-honored principle of land ownership that "all lands that were not acquired from
the Government, either by purchase or by grant, belong to the public domain." 43
Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of
1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the @rst statutory law governing
the ownership and disposition of reclaimed lands in the Philippines. On May 18, 1907,
the Philippine Commission enacted Act No. 1654 which provided for the lease, but not
the sale, of reclaimed lands of the government to corporations and individuals.
Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the
Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals. On November 7, 1936, the National
Assembly passed Commonwealth Act No. 141, also known as the Public Land Act,
which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. CA No. 141 continues to this day as
the general law governing the classification and disposition of lands of the public
domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all
waters within the maritime zone of the Spanish territory belonged to the public domain
for public use. 44 The Spanish Law of Waters of 1866 allowed the reclamation of the sea
under Article 5, which provided as follows:
"Article 5. Lands reclaimed from the sea in consequence of
works constructed by the State, or by the provinces, pueblos or private
persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the
grant of authority."
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party
undertaking the reclamation, provided the government issued the necessary permit
and did not reserve ownership of the reclaimed land to the State.
 Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
"Art. 339. Property of public dominion is —

1. That devoted to public use, such as roads, canals, rivers, torrents,

ports and bridges constructed by the State, riverbanks, shores,
roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of
general public use, is employed in some public service, or in the
development of the national wealth, such as walls, fortresses, and
other works for the defense of the territory, and mines, until granted
to private individuals.
Property devoted to public use referred to property open for use by the
public. In contrast, property devoted to public service referred to property used
for some specific public service and open only to those authorized to use the
property.
Property of public dominion referred not only to property devoted to public use,
but also to property not so used but employed to develop the national wealth. This class
of property constituted property of public dominion although employed for some
economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classi@cation of property of
public dominion into private property, to wit:
"Art. 341. Property of public dominion, when no longer
devoted to public use or to the defense of the territory, shall become a part
of the private property of the State."
This provision, however, was not self-executing. The legislature, or the
executive department pursuant to law, must declare the property no longer needed
for public use or territorial defense before the government could lease or alienate
the property to private parties. 45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which
regulated the lease of reclaimed and foreshore lands. The salient provisions of this law
were as follows:
"Section 1. The control and disposition of the foreshore as de@ned
in existing law, and the title to all Government or public lands made or
reclaimed by the Government by dredging or @lling or otherwise
throughout the Philippine Islands, shall be retained by the Government
without prejudice to vested rights and without prejudice to rights
conceded to the City of Manila in the Luneta Extension.

Section 2. (a) The Secretary of the Interior shall cause all

Government or public lands made or reclaimed by the Government by
dredging or @lling or otherwise to be divided into lots or blocks, with
the necessary streets and alleyways located thereon, and shall cause plats
and plans of such surveys to be prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-
General shall give notice to the public that such parts of the lands so made
or reclaimed as are not needed for public purposes will be leased for
commercial and business purposes, . . . .
 xxx xxx xxx

(e) The leases above provided for shall be disposed of to the

highest and best bidder therefore, subject to such regulations and
safeguards as the Governor-General may by executive order prescribe."
(Italics supplied)
Act No. 1654 mandated that the government should retain title to all lands
reclaimed by the government. The Act also vested in the government control and
disposition of foreshore lands. Private parties could lease lands reclaimed by the
government only if these lands were no longer needed for public purpose. Act No. 1654
mandate public bidding in the lease of government reclaimed lands. Act No. 1654 made
government reclaimed lands sui generis in that unlike other public lands which
the government could sell to private parties, these reclaimed lands were available only
for lease to private parties.
Act No. 1654, however did not repeal Section 5 of the Spanish Law of Waters of
1866. Act No. 1654 did not prohibit private parties from reclaiming parts of the sea under
Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by private parties
with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public
Land Act. 46 The salient provisions of Act No. 2874, on reclaimed lands, were as
follows:
"Sec. 6. The Governor-General, upon the recommendation of
the Secretary of Agriculture and Natural Resources, shall from time to time
classify the lands of the public domain into —
(a) Alienable or
disposable, (b) Timber,

and

(c) Mineral lands, . . .

Sec. 7. For the purposes of the government and disposition

of alienable or disposable public lands, the Governor-General, upon
recommendation by the Secretary of Agriculture and Natural Resources, shall
from time to time declare what lands are open to disposition or concession
under this Act."
Sec. 8. Only those lands shall be declared open to
disposition or concession which have been officially delimited or classified. .
..
xxx xxx xxx

Sec. 55. Any tract of land of the public domain which, being
neither timber nor mineral land, shall be classi@ed as suitable for residential
purposes or for commercial, industrial, or other productive purposes other
than agricultural purposes, and shall be open to disposition or concession,
shall be disposed of under the provisions of this chapter, and not otherwise.
 Sec. 56. The lands disposable under this title shall be classi@ed as
follows:
(a) Lands reclaimed by the Government by dredging, @lling, or
other means;
(b) Foreshore;
 (c) Marshy lands or lands covered with water bordering upon
the shores or banks of navigable lakes or rivers;

(d) Lands not included in any of the foregoing

classes. xxx xxx xxx.

Sec. 58. The lands comprised in classes (a), (b), and (c) of section
@fty-six shall be disposed of to private parties by lease only and not
otherwise, as soon as the Governor-General, upon recommendation by
the Secretary of Agriculture and Natural Resources, shall declare that the
same are not necessary for the public service and are open to disposition
under this chapter. The lands included in class (d) may be disposed of by sale
or lease under the provisions of this Act." (Italics supplied)
Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the
public domain into . . . alienable or disposable" 47 lands. Section 7 of the Act empowered
the Governor-General to "declare what lands are open to disposition or
concession." Section 8 of the Act limited alienable or disposable lands only to those lands
which have been "officially delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under this title 48 shall be
classi@ed" as government reclaimed, foreshore and marshy lands, as well as other lands.
All these lands, however, must be suitable for residential, commercial, industrial or other
productive non-agricultural purposes. These provisions vested upon the Governor-General
the power to classify inalienable lands of the public domain into disposable lands of the
public domain. These provisions also empowered the Governor-General to classify further
such disposable lands of the public domain into government reclaimed, foreshore
or marshy lands of the public domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the
public domain classi@ed as government reclaimed, foreshore and marshy lands "shall be
disposed of to private parties by lease only and not otherwise." The Governor-General,
before allowing the lease of these lands to private parties, must formally declare that the
lands were "not necessary for the public service." Act No. 2874 reiterated the State policy
to lease and not to sell government reclaimed, foreshore and marshy lands of the public
domain, a policy @rst enunciated in 1907 in Act No. 1654. Government reclaimed,
foreshore and marshy lands remained sui generis, as the only alienable or disposable
lands of the public domain that the government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore
and marshy public lands for non-agricultural purposes retain their inherent potential as
areas for public service. This is the reason the government prohibited the sale, and only
allowed the lease, of these lands to private parties. The State always reserved these
lands for some future public service.
Act No. 2874 did not authorize the reclassi@cation of government reclaimed,
foreshore and marshy lands into other non-agricultural lands under Section 56 (d). Lands
falling under Section 56 (d) were the only lands for non-agricultural purposes the
government could sell to private parties. Thus, under Act No. 2874, the government could
not sell government reclaimed, foreshore and marshy lands to private parties, unless the
legislature passed a law allowing their sale. 49
Act No. 2874 did not prohibit private parties from reclaiming parts of the
sea
pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from the sea
by private parties with government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its rati@cation by the
Filipino people. The 1935 Constitution, in adopting the Regalian doctrine, declared
in Section 1, Article XIII, that —
"Section 1. All agricultural, timber, and mineral lands of the
public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy and other natural resources of the Philippines
belong to the State, and their disposition, exploitation, development,
or utilization shall be limited to citizens of the Philippines or to
corporations or associations at least sixty per centum of the capital of which
is owned by such citizens, subject to any existing right, grant, lease, or
concession at the time of the inauguration of the Government established
under this Constitution. Natural resources, with the exception of public
agricultural land, shall not be alienated, and no license, concession, or
lease for the exploitation, development, or utilization of any of the natural
resources shall be granted for a period exceeding twenty-@ve years,
renewable for another twenty-@ve years, except as to water rights for
irrigation, water supply, @sheries, or industrial uses other than the
development of water power, in which cases bene@cial use may be the
measure and limit of the grant." (Italics supplied)
The 1935 Constitution barred the alienation of all natural resources except public
agricultural lands, which were the only natural resources the State could alienate. Thus,
foreshore lands, considered part of the State's natural resources, became inalienable by
constitutional fiat, available only for lease for 25 years, renewable for another 25 years.
The government could alienate foreshore lands only after these lands were
reclaimed and classi@ed as alienable agricultural lands of the public domain.
Government reclaimed and marshy lands of the public domain, being neither timber nor
mineral lands, fell under the classi@cation of public agricultural lands. 50 However,
government reclaimed and marshy lands, although subject to classi@cation as disposable
public agricultural lands, could only be leased and not sold to private parties because of
Act No. 2874.
The prohibition on private parties from acquiring ownership of government
reclaimed and marshy lands of the public domain was only a statutory prohibition and the
legislature could therefore remove such prohibition. The 1935 Constitution did not
prohibit individuals and corporations from acquiring government reclaimed and marshy
lands of the public domain that were classi@ed as agricultural lands under existing public
land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:
"Section 2. No private corporation or association may acquire,
lease, or hold public agricultural lands in excess of one thousand and twenty
four hectares, nor may any individual acquire such lands by purchase in
excess of one hundred and forty hectares, or by lease in excess of one
thousand and twenty-four hectares, or by homestead in excess of twenty-
four hectares. Lands adapted to grazing, not exceeding two thousand
hectares, may be leased to an individual, private corporation, or
association." (Italics supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section
58 of Act No. 2874 to open for sale to private parties government reclaimed
and marshy lands of the public domain. On the contrary, the legislature continued the
long
 established State policy of retaining for the government title and ownership of
government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No.
141, also known as the Public Land Act, which compiled the then existing laws on lands of
the public domain. CA No. 141, as amended, remains to this day the existing general law
governing the classi@cation and disposition of lands of the public domain other
than timber and mineral lands. 51
Section 6 of CA No. 141 empowers the President to classify lands of the public
domain into "alienable or disposable" 52 lands of the public domain, which prior to such
classi@cation are inalienable and outside the commerce of man. Section 7 of CA No. 141
authorizes the President to "declare what lands are open to disposition or concession."
Section 8 of CA No. 141 states that the government can declare open for disposition or
concession only lands that are "oJcially delimited and classi@ed." Sections 6, 7 and 8 of
CA No. 141 read as follows:
"Sec. 6. The President, upon the recommendation of the Secretary
of Agriculture and Commerce, shall from time to time classify the lands of
the public domain into —
(a) Alienable or

disposable, (b) Timber

and

(c) Mineral lands,

and may at any time and in like manner transfer such lands from one
class to another, 53 for the purpose of their administration and disposition.

"Sec. 7. For the purposes of the administration and

disposition of alienable or disposable public lands, the President, upon
recommendation by the Secretary of Agriculture and Commerce, shall from
time to time declare what lands are open to disposition or concession under
this Act.
Sec. 8. Only those lands shall be declared open to
disposition or concession which have been oJcially delimited and
classi@ed and, when practicable, surveyed, and which have not been
reserved for public or quasi-public uses, nor appropriated by the
Government, nor in any manner become private property, nor those on
which a private right authorized and recognized by this Act or any other
valid law may be claimed, or which, having been reserved or
appropriated, have ceased to be so. . . . ."

Thus, before the government could alienate or dispose of lands of the public domain,
the President must @rst oJcially classify these lands as alienable or disposable, and
then declare them open to disposition or concession. There must be no law reserving
these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore
and marshy lands of the public domain, are as follows:"
 "Sec. 58. Any tract of land of the public domain which, being
neither timber nor mineral land, is intended to be used for residential
purposes or for commercial, industrial, or other productive purposes other
than agricultural, and is open to disposition or concession, shall be disposed
of under the provisions of
 this chapter and not
otherwise.
Sec. 59. The lands disposable under this title shall be classi@ed as
follows:
(a) Lands reclaimed by the Government by dredging, @lling, or
other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon
the shores or banks of navigable lakes rivers;

(d) Lands not included in any of the foregoing classes.

Sec. 60. Any tract of land comprised under this title may be leased
or sold, as the case may be, to any person, corporation, or association
authorized to purchase or lease public lands for agricultural purposes. . . . .
Sec. 61. The lands comprised in classes (a), (b), and (c) of section
@fty-nine shall be disposed of to private parties by lease only and not
otherwise, as soon as the President, upon recommendation by the Secretary
of Agriculture, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands included in
class (d) may be disposed of by sale or lease under the provisions of this Act."
(Italics supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution,
Section 58 of Act No. 2874 prohibiting the sale of government reclaimed, foreshore and
marshy disposable lands of the public domain. All these lands are intended for
residential, commercial, industrial or other non-agricultural purposes. As before, Section
61 allowed only the lease of such lands to private parties. The government could sell to
private parties only lands falling under Section 59 (d) of CA No. 141, or those lands for
non-agricultural purposes not classi@ed as government reclaimed, foreshore and marshy
disposable lands of the public domain. Foreshore lands, however, became
inalienable under the 1935
Constitution which only allowed the lease of these lands to qualified private
parties.
Section 58 of CA No. 141 expressly states that disposable lands of the
public domain intended for residential, commercial, industrial or other productive
purposes other than agricultural "shall be disposed of under the provisions of this
chapter and not otherwise." Under Section 10 of CA No. 141, the term "disposition"
includes lease of the land. Any disposition of government reclaimed, foreshore and
marshy disposable lands for non-agricultural purposes must comply with Chapter IX, Title
III of CA No. 141, 54 unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation
v. Court of Appeals, 55 Justice Reynato S. Puno summarized succinctly the law on this
matter, as follows:
"Foreshore lands are lands of public dominion intended for public
use. So too are lands reclaimed by the government by dredging, @lling, or
other means. Act 1654 mandated that the control and disposition of the
foreshore and lands under water remained in the national government.
Said law allowed only the
'leasing' of reclaimed land. The Public Land Acts of 1919 and 1936 also
declared that the foreshore and lands reclaimed by the government were to
be "disposed of to private parties by lease only and not otherwise." Before
leasing, however, the Governor-General, upon recommendation of the
Secretary of Agriculture and
 Natural Resources, had @rst to determine that the land reclaimed was
not necessary for the public service. This requisite must have been met
before the land could be disposed of. But even then, the foreshore and lands
under water were not to be alienated and sold to private parties. The
disposition of the reclaimed land was only by lease. The land
remained property of the State."(Italics supplied)
As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has
remained in effect at present."
The State policy prohibiting the sale to private parties of government reclaimed,
foreshore and marshy alienable lands of the public domain, @rst implemented in 1907
was thus reaJrmed in CA No. 141 after the 1935 Constitution took effect. The prohibition
on the sale of foreshore lands, however, became a constitutional edict under the
1935
Constitution, Foreshore lands became inalienable as natural resources of the State,
unless reclaimed by the government and classi@ed as agricultural lands of the public
domain, in which case they would fall under the classification of government reclaimed
lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy
disposable lands of the public domain continued to be only leased and not sold to private
parties. 56 These lands remained sui generis, as the only alienable or disposable lands of
the public domain the government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties
government reclaimed and marshy disposable lands of the public domain is for
the legislature to pass a law authorizing such sale. CA No. 141 does not authorize
the President to reclassify government reclaimed and marshy lands into other non-
agricultural lands under Section 59 (d). Lands classi@ed under Section 59 (d) are the only
alienable or disposable lands for non-agricultural purposes that the government could sell
to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority
before lands under Section 59 that the government previously transferred to government
units or entities could be sold to private parties. Section 60 of CA No. 141 declares that —
"Sec. 60. . . . The area so leased or sold shall be such as shall, in
the judgment of the Secretary of Agriculture and Natural Resources, be
reasonably necessary for the purposes for which such sale or lease is
requested, and shall not exceed one hundred and forty-four hectares:
Provided, however, That this limitation shall not apply to grants,
donations, or transfers made to a province, municipality or branch or
subdivision of the Government for the purposes deemed by said entities
conducive to the public interest; but the land so granted, donated, or
transferred to a province, municipality or branch or subdivision of the
Government shall not be alienated, encumbered, or otherwise disposed of in
a manner affecting its title, except when authorized by Congress: . . . ."
(Italics supplied)

The congressional authority required in Section 60 of CA No. 141 mirrors the legislative
authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141
exempted government units and entities from the maximum area of public lands that
could be acquired from the State. These government units and entities should not
just turn around and sell these lands to private parties in violation of constitutional or
statutory
limitations. Otherwise, the transfer of lands for non-agricultural purposes to government
units and entities could be used to circumvent constitutional limitations on ownership of
alienable or disposable lands of the public domain. In the same manner, such transfers
could also be used to evade the statutory prohibition in CA No. 141 on the sale
of government reclaimed and marshy lands of the public domain to private parties.
Section
60 of CA No. 141 constitutes by operation of law a lien on these lands.
57

In case of sale or lease of disposable lands of the public domain falling

under Section 59 of CA No. 141, Sections 63 and 67 require a public bidding. Sections 63
and 67 of CA No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered by this chapter
are not needed for public purposes, the Director of Lands shall ask the
Secretary of Agriculture and Commerce (now the Secretary of Natural
Resources) for authority to dispose of the same. Upon receipt of such
authority, the Director of Lands shall give notice by public advertisement in
the same manner as in the case of leases or sales of agricultural public land,
...
Sec. 67. The lease or sale shall be made by oral bidding;
and adjudication shall be made to the highest bidder. . . . ." (Italics supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales
of alienable or disposable lands of the public domain. 58
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5
of the Spanish Law of Waters of 1866. Private parties could still reclaim portions of the
sea with government permission. However, the reclaimed land could become private land
only if classi@ed as alienable agricultural land of the public domain open to disposition
under CA No. 141. The 1935 Constitution prohibited the alienation of all natural resources
except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the de@nition of property of public
dominion found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950
state that —
"Art. 420. The following things are property of public
dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and
are intended for some public service or for the development of the
national wealth.
xxx xxx
xxx.
 Art. 422. Property of public dominion, when no longer
intended for public use or for public service, shall form part of the
patrimonial property of the State."
Again, the government must formally declare that the property of public dominion
is no longer needed for public use or public service, before the same could be classi@ed
as patrimonial property of the State. 59 In the case of government reclaimed and
marshy
lands of the public domain, the declaration of their being disposable, as well as the
manner of their disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public
dominion those properties of the State which, without being for public use, are intended
for public service or the "development of the national wealth." Thus, government
reclaimed and marshy lands of the State, even if not employed for public use or public
service, if developed to enhance the national wealth, are classified as property of public
dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the
Regalian doctrine. Section 8, Article XIV of the 1973 Constitution stated that —
"Sec. 8. All lands of the public domain, waters, minerals,
coal, petroleum and other mineral oils, all forces of potential energy,
@sheries, wildlife, and other natural resources of the Philippines belong
to the State. With the exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain, natural
resources shall not be alienated, and no license, concession, or lease
for the exploration, development, exploitation, or utilization of any of
the natural resources shall be granted for a period exceeding twenty-@ve
years, renewable for not more than twenty-@ve years, except as to water
rights for irrigation, water supply, @sheries, or industrial uses other than the
development of water power, in which cases, bene@cial use may be the
measure and the limit of the grant." (Italics supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the
exception of "agricultural, industrial or commercial, residential, and resettlement lands
of the public domain." In contrast, the 1935 Constitution barred the alienation of all
natural resources except "public agricultural lands." However, the term "public
agricultural lands" in the 1935 Constitution encompassed industrial, commercial,
residential and resettlement lands of the public domain. 60 If the land of public domain
were neither timber nor mineral land, it would fall under the classi@cation of agricultural
land of the public domain. Both the
1935 and 1973 Constitutions, therefore, prohibited the alienation of all natural resources
except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public
domain to individuals who were citizens of the Philippines. Private corporations, even if
wholly owned by Philippine citizens, were no longer allowed to acquire alienable
lands of the public domain unlike in the 1935 Constitution. Section 11, Article XIV
of the 1973
Constitution declared that —
"Sec. 11. The Batasang Pambansa, taking into account
conservation, ecological, and development requirements of the natural
resources, shall determine by law the size of land of the public domain
which may be developed, held or acquired by, or leased to, any
quali@ed individual, corporation, or association, and the conditions
therefor. No private corporation or association may hold alienable lands of
the public domain except by lease not to exceed one thousand hectares in
area nor may any citizen hold such lands by lease in excess of @ve hundred
hectares or acquire by purchase, homestead or grant, in excess of twenty-
four hectares. No private corporation or association may hold by lease,
concession, license or permit, timber or forest lands and other timber or
forest resources in excess of one hundred thousand hectares. However, such
area may be increased by the Batasang Pambansa upon recommendation of
the National
 Economic and Development Authority." (Italics supplied)

Thus, under the 1973 Constitution, private corporations could hold alienable lands
of the public domain only through lease. Only individuals could now acquire alienable
lands of the public domain, and private corporations became absolutely barred from
acquiring any kind of alienable land of the public domain. The constitutional ban
extended to all kinds of alienable lands of the public domain, while the statutory ban
under CA No. 141 applied only to government reclaimed, foreshore and marshy alienable
lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree
No. 1084 creating PEA, a wholly government owned and controlled corporation with a
special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes
and powers:
"Sec. 4. Purpose. The Authority is hereby created for the
following purposes:
(a) To reclaim land, including foreshore and submerged
areas, by dredging, filling or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands, buildings,
estates and other forms of real property, owned, managed, controlled
and/or operated by the government;

(c) To provide for, operate or administer such service as

may be necessary for the eJcient, economical and bene@cial utilization
of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall,
in carrying out the purposes for which it is created, have the following
powers and functions:
(a) To prescribe its by-

laws. xxx xxx

xxx
(i) To hold lands of the public domain in excess of the area
permitted to private corporations by statute.

(j) To reclaim lands and to construct work across, or

otherwise, any stream, watercourse, canal, ditch, flume . . . .

xxx xxx xxx

(o) To perform such acts and exercise such functions as may

be necessary for the attainment of the purposes and objectives
herein specified." (Italics supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the
public domain. Foreshore areas are those covered and uncovered by the ebb and Qow of
the tide. 61 Submerged areas are those permanently under water regardless of the ebb
and Qow of the tide. 62 Foreshore and submerged areas indisputably belong to the
public domain 63 and are inalienable unless reclaimed, classi@ed as alienable lands
open to disposition, and further declared no longer needed for public service.
 The ban in the 1973 Constitution on private corporations from acquiring alienable
lands of the public domain did not apply to PEA since it was then, and until today, a fully
owned government corporation. The constitutional ban applied then, as it still applies
now, only to "private corporations and associations." PD No. 1084 expressly empowers PEA
"to hold lands of the public domain" even "in excess of the area permitted to
private corporations by statute." Thus, PEA can hold title to private lands, as well as title
to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of
the public domain, there must be legislative authority empowering PEA to sell these
lands. This legislative authority is necessary in view of Section 60 of CA No. 141, which
states —
"Sec. 60. . . . ; but the land so granted, donated or transferred to
a province, municipality, or branch or subdivision of the Government shall
not be alienated, encumbered or otherwise disposed of in a manner affecting
its title, except when authorized by Congress; . . . ." (Italics supplied)

Without such legislative authority, PEA could not sell but only lease its
reclaimed foreshore and submerged alienable lands of the public domain.
Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable
lands of the public domain would be subject to the constitutional ban on private
corporations from acquiring alienable lands of the public domain. Hence, such
legislative authority could only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted
the Regalian doctrine. The 1987 Constitution declares that all natural resources are
"owned by the State," and except for alienable agricultural lands of the public
domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of the 1987
Constitution state that —
"Section 2. All lands of the public domain, waters, minerals,
coal, petroleum and other mineral oils, all forces of potential energy,
@sheries, forests or timber, wildlife, Qora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands,
all other natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be under the full
control and supervision of the State. . . . .

Section 3. Lands of the public domain are classi@ed into

agricultural, forest or timber, mineral lands, and national parks. Agricultural
lands of the public domain may be further classi@ed by law according to the
uses which they may be devoted. Alienable lands of the public domain shall
be limited to agricultural lands. Private corporations or associations may
not hold such alienable lands of the public domain except by lease, for a
period not exceeding twenty-@ve years, renewable for not more than
twenty-@ve years, and not to exceed one thousand hectares in area. Citizens
of the Philippines may lease not more than @ve hundred hectares, or
acquire not more than twelve hectares thereof by purchase,
homestead, or grant.
 Taking into account the requirements of conservation, ecology,
and development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain
which may be
 acquired, developed, held, or leased and the conditions therefor." (Italics supplied)

The 1987 Constitution continues the State policy in the 1973 Constitution banning
private corporations from acquiring any kind of alienable land of the public domain. Like
the 1973 Constitution, the 1987 Constitution allows private corporations to hold alienable
lands of the public domain only through lease. As in the 1935 and 1973 Constitutions, the
general law governing the lease to private corporations of reclaimed, foreshore
and marshy alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except
through lease, alienable lands of the public domain is not well understood. During the
deliberations of the 1986 Constitutional Commission, the commissioners probed the
rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have reference to page
3, line 5 which says:

'No private corporation or association may hold alienable lands

of the public domain except by lease, not to exceed one thousand
hectares in area.'
If we recall, this provision did not exist under the 1935 Constitution,
but this was introduced in the 1973 Constitution. In effect, it prohibits
private corporations from acquiring alienable public lands. But it has
not been very clear in jurisprudence what the reason for this is. In some of
the cases decided in 1982 and 1983, it was indicated that the purpose
of this is to prevent large landholdings. Is that the intent of this
provision?
MR. VILLEGAS: I think that is the spirit of the provision.

FR. BERNAS: In existing decisions involving the Iglesia ni Cristo,

there were instances where the Iglesia ni Cristo was not allowed to acquire a
mere 313- square meter land where a chapel stood because the Supreme
Court said it would be in violation of this." (Italics supplied)

In Ayog v. Cusi, 64 the Court explained the rationale behind this constitutional ban
in this way:
"Indeed, one purpose of the constitutional prohibition
against purchases of public agricultural lands by private corporations is
to equitably diffuse land ownership or to encourage 'owner-cultivatorship
and the economic family-size farm' and to prevent a recurrence of cases like
the instant case. Huge landholdings by corporations or private persons had
spawned social unrest."
However, if the constitutional intent is to prevent huge landholdings, the Constitution
could have simply limited the size of alienable lands of the public domain
that corporations could acquire. The Constitution could have followed the
limitations on individuals, who could acquire not more than 24 hectares of
alienable lands of the public domain under the 1973 Constitution, and not more than
12 hectares under the
1987 Constitution.
 If the constitutional intent is to encourage economic family-size farms, placing the
land in the name of a corporation would be more effective in preventing the break-up of
farmlands. If the farmland is registered in the name of a corporation, upon the death of
the
owner, his heirs would inherit shares in the corporation instead of subdivided parcels of
the farmland. This would prevent the continuing break-up of farmlands into smaller and
smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation
on individuals from acquiring more than the allowed area of alienable lands of the
public domain. Without the constitutional ban, individuals who already acquired the
maximum area of alienable lands of the public domain could easily set up corporations to
acquire more alienable public lands. An individual could own as many corporations as his
means would allow him. An individual could even hide his ownership of a corporation by
putting his nominees as stockholders of the corporation. The corporation is a convenient
vehicle to circumvent the constitutional limitation on acquisition by individuals of
alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to
transfer ownership of only a limited area of alienable land of the public domain to
a quali@ed individual. This constitutional intent is safeguarded by the
provision prohibiting corporations from acquiring alienable lands of the public
domain, since the vehicle to circumvent the constitutional intent is removed. The
available alienable public lands are gradually decreasing in the face of an ever-growing
population. The most effective way to insure faithful adherence to this constitutional
intent is to grant or sell alienable lands of the public domain only to individuals. This, it
would seem, is the practical bene@t arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause,
consists of three properties, namely:
1. "[T]hree partially reclaimed and substantially eroded islands
along Emilio Aguinaldo Boulevard in Parañaque and Las Piñas, Metro
Manila, with a combined titled area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three
islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares
more or less to regularize the configuration of the reclaimed area."
65

PEA con@rms that the Amended JVA involves "the development of the Freedom Islands
and further reclamation of about 250 hectares . . . ," plus an option "granted to AMARI
to subsequently reclaim another 350 hectares . . . ." 66
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84
hectares of the 750-hectare reclamation project have been reclaimed, and the rest of the
592.15 hectares are still submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00
for PEA's "actual cost" in partially reclaiming the Freedom Islands. AMARI will also
complete, at its own expense, the reclamation of the Freedom Islands. AMARI will further
shoulder all the reclamation costs of all the other areas, totaling 592.15 hectares, still to
be reclaimed. AMARI and PEA will share, in the proportion of 70 percent and 30 percent,
respectively, the total net usable area which is de@ned in the Amended JVA as the total
reclaimed area less 30 percent earmarked for common areas. Title to AMARI's share in the
net usable area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2
(c) of the Amended JVA provides that —
". . . , PEA shall have the duty to execute without delay the necessary
deed of transfer or conveyance of the title pertaining to AMARI's Land share
based on the Land Allocation Plan. PEA, when requested in writing by
AMARI, shall then cause the issuance and delivery of the proper certificates
of title covering AMARI's Land Share in the name of AMARI, . . . ; provided,
that if more than seventy percent (70%) of the titled area at any given time
pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of
the titles pertaining to AMARI, until such time when a corresponding
proportionate area of additional land pertaining to PEA has been titled."
(Italics supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5
hectares of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI
joint venture PEA's statutory authority, rights and privileges to reclaim foreshore
and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that —
"PEA hereby contributes to the joint venture its rights and
privileges to perform Rawland Reclamation and Horizontal Development as
well as own the Reclamation Area, thereby granting the Joint Venture the
full and exclusive right, authority and privilege to undertake the Project in
accordance with the Master Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA dated April 25,
1995 and its supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own
under the Amended JVA 367.5 hectares of reclaimed foreshore and submerged areas in
Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution which state
that:
"Section 2. All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy,
@sheries, forests or timber, wildlife, Qora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands,
all other natural resources shall not be alienated. . . . .
xxx xxx xxx

Section 3. . . . Alienable lands of the public domain shall be

limited to agricultural lands. Private corporations or associations may
not hold such alienable lands of the public domain except by lease, . . . ."
(Italics supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of
Manila Bay are alienable or disposable lands of the public domain, In its Memorandum, 67
PEA admits that —
 "Under the Public Land Act (CA 141, as amended), reclaimed lands
are classified as alienable and disposable lands of the public domain:
 'Sec. 59. The lands disposable under this title shall be
classi@ed as follows:
(a) Lands reclaimed by the government by dredging, @lling, or
other means;
xxx xxx xxx.'" (Italics supplied)

Likewise, the Legal Task Force 68 constituted under Presidential

Administrative Order No. 365 admitted in its Report and Recommendation to then
President Fidel V. Ramos, "[R]eclaimed lands are classi@ed as alienable and disposable
lands of the public domain." 69 The Legal Task Force concluded that —
"D. Conclusion

Reclaimed lands are lands of the public domain. However, by

statutory authority, the rights of ownership and disposition over reclaimed
lands have been transferred to PEA, by virtue of which PEA, as owner, may
validly convey the same to any qualified person without violating the
Constitution or any statute.
The constitutional provision prohibiting private corporations from
holding public land, except by lease (Sec. 3, Art. XVII, 70 1987 Constitution),
does not apply to reclaimed lands whose ownership has passed on to PEA by
statutory grant."
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged
areas of Manila Bay are part of the "lands of the public domain, waters . . . and other
natural resources" and consequently "owned by the State." As such, foreshore and
submerged areas "shall not be alienated," unless they are classi@ed as "agricultural lands"
of the public domain. The mere reclamation of these areas by PEA does not convert these
inalienable natural resources of the State into alienable or disposable lands of the public
domain. There must be a law or presidential proclamation oJcially classifying these
reclaimed lands as alienable or disposable and open to disposition or concession.
Moreover, these reclaimed lands cannot be classi@ed as alienable or disposable if the law
has reserved them for some public or quasi-public use. 71
Section 8 of CA No. 141 provides that "only those lands shall be declared open to
disposition or concession which have been oJcially delimited and classi@ed." 72 The
President has the authority to classify inalienable lands of the public domain into
alienable or disposable lands of the public domain, pursuant to Section 6 of CA No. 141.
In Laurel vs. Garcia, 73 the Executive Department attempted to sell the Roppongi
property in Tokyo, Japan, which was acquired by the Philippine Government for use as
the Chancery of the Philippine Embassy. Although the Chancery had transferred to
another location thirteen years earlier, the Court still ruled that, under Article 422 74 of
the Civil Code, a property of public dominion retains such character until formally
declared otherwise. The Court ruled that —
"The fact that the Roppongi site has not been used for a long time for
actual Embassy service does not automatically convert it to patrimonial
property. Any such conversion happens only if the property is withdrawn
from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]. A property continues to be part of the public domain, not
available for private appropriation or ownership 'until there is a formal
declaration on the part of the government to withdraw it from being such'
(Ignacio v. Director of Lands, 108 Phil. 335 [1960]." (Italics supplied)
 PD No. 1085, issued on February 4, 1977, authorized the issuance of special land
patents for lands reclaimed by PEA from the foreshore or submerged areas of Manila Bay.
On January 19, 1988 then President Corazon C. Aquino issued Special Patent No. 3517 in
the name of PEA for the 157.84 hectares comprising the partially reclaimed Freedom
Islands. Subsequently, on April 9, 1999 the Register of Deeds of the Municipality
of Parañaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to
Section
103 of PD No. 1529 authorizing the issuance of certi@cates of title corresponding to land
patents. To this day, these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuance of a special patent
covering the Freedom Islands, is equivalent to an oJcial proclamation classifying the
Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085 and
President Aquino's issuance of a land patent also constitute a declaration that the
Freedom Islands are no longer needed for public service. The Freedom Islands are thus
alienable or disposable lands of the public domain, open to disposition or concession to
qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already
reclaimed the Freedom Islands although subsequently there were partial erosion on some
areas. The government had also completed the necessary surveys on these islands. Thus,
the Freedom Islands were no longer part of Manila Bay but part of the land mass. Section
3, Article XII of the 1987 Constitution classi@es lands of the public domain into
"agricultural, forest or timber, mineral lands, and national parks." Being neither
timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall
under the classi@cation of agricultural lands of the public domain. Under the 1987
Constitution, agricultural lands of the public domain are the only natural resources that
the State may alienate to quali@ed private parties. All other natural resources, such as
the seas or bays, are "waters . . . owned by the State" forming part of the public domain,
and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a
private corporation, reclaimed the islands under a contract dated November 20, 1973
with the Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish
Law of Waters of 1866, argues that "if the ownership of reclaimed lands may be given to
the party constructing the works, then it cannot be said that reclaimed lands are lands of
the public domain which the State may not alienate." 75 Article 5 of the Spanish Law of
Waters reads as follows:
"Article 5. Lands reclaimed from the sea in consequence of
works constructed by the State, or by the provinces, pueblos or private
persons, with proper permission shall become the property of the party
constructing such works, unless otherwise provided by the terms of the
grant of authority." (Italics supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim
from the sea only with "proper permission" from the State. Private parties could own the
reclaimed land only if not "otherwise provided by the terms of the grant of authority."
This clearly meant that no one could reclaim from the sea without permission from the
State because the sea is property of public dominion. It also meant that the State could
grant or withhold ownership of the reclaimed land because any reclaimed land, like the
sea from which it emerged, belonged to the State. Thus, a private person reclaiming from
the sea without permission from the State could not acquire ownership of the
reclaimed land which would remain property of public dominion like the sea it replaced.
76 Article 5 of the
Spanish Law of Waters of 1866 adopted the time-honored principle of land ownership that
"all lands that were not acquired from the government, either by purchase or by grant,
belong to the public domain." 77
Article 5 of the Spanish Law of Waters must be read together with laws
subsequently enacted on the disposition of public lands. In particular, CA No. 141
requires that lands of the public domain must @rst be classi@ed as alienable or
disposable before the government can alienate them. These land must not be reserved
for public or quasi- public purposes. 78 Moreover, the contract between CDCP and
the government was executed after the effectivity of the 1973 Constitution which
barred private corporations from acquiring any kind of alienable land of the public
domain. This contract could not have converted the Freedom Islands into private lands of
a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws
authorizing the reclamation of areas under water and revested solely in the
National Government the power to reclaim lands. Section 1 of PD No. 3-A declared that —
"The provisions of any law to the contrary notwithstanding,
the reclamation of areas under water, whether foreshore or inland, shall be
limited to the National Government or any person authorized by it under a
proper contract. (Italics supplied)

xxx xxx
xxx."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because
reclamation of areas under water could now be undertaken only by the
National Government or by a person contracted by the National Government. Private
parties may reclaim from the sea only under a contract with the National Government,
and no longer by grant or permission as provided in Section 5 of the Spanish Law of
Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as
the National Government's implementing arm to undertake "all reclamation projects of
the government," which "shall be undertaken by the PEA or through a proper contract
executed by it with any person or entity." Under such contract, a private party receives
compensation for reclamation services rendered to PEA. Payment to the contractor may
be in cash, or in kind consisting of portions of the reclaimed land, subject to the
constitutional ban on private corporations from acquiring alienable lands of the public
domain. The reclaimed land can be used as payment in kind only if the reclaimed
land is @rst classi@ed as alienable or disposable land open to disposition, and then
declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an
additional
592.15 hectares which are still submerged and forming part of Manila Bay. There is no
legislative or Presidential act classifying these submerged areas as alienable or
disposable lands of the public domain open to disposition. These submerged areas are not
covered by any patent or certi@cate of title. There can be no dispute that these
submerged areas form part of the public domain, and in their present state are
inalienable and outside the commerce of man. Until reclaimed from the sea, these
submerged areas are, under the Constitution, "waters . . . owned by the State," forming
part of the public domain and consequently inalienable. Only when actually reclaimed
from the sea can these submerged areas be classi@ed as public agricultural lands, which
under the Constitution are the only natural resources that the State may alienate.
Once reclaimed and
transformed into public agricultural lands, the government may then oJcially
classify these lands as alienable or disposable lands open to disposition.
Thereafter, the government may declare these lands no longer needed for public
service. Only then can these reclaimed lands be considered alienable or disposable lands
of the public domain and within the commerce of man.
The classi@cation of PEA's reclaimed foreshore and submerged lands into alienable
or disposable lands open to disposition is necessary because PEA is tasked under its
charter to undertake public services that require the use of lands of the public domain.
Under Section 5 of PD No. 1084, the functions of PEA include the following: "[T]o own or
operate railroads, tramways and other kinds of land transportation, . . . ; [T]o construct,
maintain and operate such systems of sanitary sewers as may be necessary; [T]o
construct, maintain and operate such storm drains as may be necessary." PEA is
empowered to issue "rules and regulations as may be necessary for the proper use by
private parties of any or all of the highways, roads, utilities, buildings and/or any of its
properties and to impose or collect fees or tolls for their use." Thus, part of the
reclaimed foreshore and submerged lands held by the PEA would actually be needed for
public use or service since many of the functions imposed on PEA by its charter constitute
essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be
primarily responsible for integrating, directing, and coordinating all reclamation
projects and on behalf of the National Government." The same section also states that
"[A]ll reclamation projects shall be approved by the President upon the recommendation
of the PEA, and shall be undertaken by the PEA or through a proper contract executed by
it with any person or entity; . . . ." Thus, under EO No. 525, in relation to PD No. 3-A and
PD No. 1084, PEA became the primary implementing agency of the National
Government to reclaim foreshore and submerged lands of the public domain. EO No. 525
recognized PEA as the entity "to undertake the reclamation of lands and ensure
their maximum utilization in promoting public welfare and interests." 79 Since large
portions of these reclaimed lands would obviously be needed for public service,
there must be a formal declaration segregating reclaimed lands no longer needed for
public service from those still needed for public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong
to or be owned by the PEA," could not automatically operate to classify inalienable lands
into alienable or disposable lands of the public domain. Otherwise, reclaimed foreshore
and submerged lands of the public domains would automatically become alienable once
reclaimed by PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO
No. 525, vests in the Department of Environment and Natural Resources ("DENR"
for brevity) the following powers and functions:
"Sec. 4. Powers and Functions. The Department

shall: (1) ...

xxx xxx xxx

(4) Exercise supervision and control over forest lands, alienable

and disposable public lands, mineral resources and, in the process of
exercising such control, impose appropriate taxes, fees, charges, rentals and
 any such form of levy and collect such revenues for the exploration,
development, utilization or
gathering of such
resources; xxx xxx xxx

(14) Promulgate rules, regulations and guidelines on the issuance

of licenses, permits, concessions, lease agreements and such other
privileges concerning the development, exploration and utilization of the
country's marine, freshwater, and brackish water and over all aquatic
resources of the country and shall continue to oversee, supervise and police
our natural resources; cancel or cause to cancel such privileges upon failure,
non-compliance or violations of any regulation, order, and for all other
causes which are in furtherance of the conservation of natural resources
and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management
and disposition of all lands of the public domain and serve as the
sole agency responsible for classi@cation, sub-classi@cation, surveying and
titling of lands in consultation with appropriate agencies." 80 (Italics
supplied)
As manager, conservator and overseer of the natural resources of the State, DENR
exercises "supervision and control over alienable and disposable public lands." DENR also
exercises "exclusive jurisdiction on the management and disposition of all lands of the
public domain." Thus, DENR decides whether areas under water, like foreshore or
submerged areas of Manila Bay, should be reclaimed or not. This means that PEA needs
authorization from DENR before PEA can undertake reclamation projects in Manila Bay, or
in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the
public domain. Hence, DENR decides whether reclaimed lands of PEA should be classi@ed
as alienable under Sections 6 81 and 7 82 of CA No. 141. Once DENR decides that the
reclaimed lands should be so classi@ed, it then recommends to the President the issuance
of a proclamation classifying the lands as alienable or disposable lands of the
public domain open to disposition. We note that then DENR Secretary Fulgencio S.
Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas
under water, while PEA is vested with the power to undertake the physical reclamation of
areas under water, whether directly or through private contractors. DENR is also
empowered to classify lands of the public domain into alienable or disposable
lands subject to the approval of the President. On the other hand, PEA is tasked to
develop, sell or lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged
areas does not make the reclaimed lands alienable or disposable lands of the
public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the
National Government of lands of the public domain to PEA does not make the lands
alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Absent two oJcial acts — a classi@cation that these lands are alienable or
disposable and open to disposition and a declaration that these lands are not needed for
public service, lands reclaimed by PEA remain inalienable lands of the public domain.
Only such an oJcial classi@cation and formal declaration can convert reclaimed lands
into alienable or disposable lands of the public domain, open to disposition under
the Constitution, Title I and Title III 83 of CA No. 141 and other applicable laws. 84
 PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the
public domain, the reclaimed lands shall be disposed of in accordance with CA No. 141,
the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands
transferred to a branch or subdivision of the government "shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when
authorized by Congress: . . . ." 85 (Emphasis by PEA)
In Laurel vs. Garcia, 86 the Court cited Section 48 of the Revised Administrative
Code of 1987, which states that —
"Sec. 48. OJcial Authorized to Convey Real Property. Whenever
real property of the Government is authorized by law to be conveyed, the
deed of conveyance shall be executed in behalf of the government by the
following: . . . ."

Thus, the Court concluded that a law is needed to convey any real property belonging
to the Government. The Court declared that —
"It is not for the President to convey real property of the
government on his or her own sole will. Any such conveyance must be
authorized and approved by a law enacted by the Congress. It requires
executive and legislative concurrence." (Italics supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority
allowing PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977,
provides that —
"The land reclaimed in the foreshore and offshore area of Manila
Bay pursuant to the contract for the reclamation and construction of the
Manila-Cavite Coastal Project between the Republic of the Philippines and
the Construction and Development Corporation of the Philippines dated
November 20, 1973 and/or any other contract or reclamation covering the
same area is hereby transferred, conveyed and assigned to the ownership
and administration of the Public Estates Authority established pursuant to PD
No. 1084; Provided, however, That the rights and interests of the
Construction and Development Corporation of the Philippines pursuant to the
aforesaid contract shall be recognized and respected.

Henceforth, the Public Estates Authority shall exercise the rights

and assume the obligations of the Republic of the Philippines (Department of
Public Highways) arising from, or incident to, the aforesaid contract
between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the
Public Estates Authority shall issue in favor of the Republic of the
Philippines the corresponding shares of stock in said entity with an issued
value of said shares of stock (which) shall be deemed fully paid and non-
assessable.
The Secretary of Public Highways and the General Manager of the
Public Estates Authority shall execute such contacts or agreements
with the Construction and Development Corporation of the Philippines,
as may be necessary to implement the above.
 Special land patent/patents shall be issued by the Secretary of Natural
Resources in favor of the Public Estates Authority without prejudice to the
subsequent transfer to the contractor or his assignees of such portion or
portions of the land reclaimed or to be reclaimed as provided for in the
above-mentioned contract. On the basis of such patents, the Land
Registration Commission shall issue the corresponding certificate of title."
(Italics supplied)
that —On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides

"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by

the PEA which shall be responsible for its administration, development,
utilization or disposition in accordance with the provisions of Presidential
Decree No. 1084. Any and all income that the PEA may derive from the
sale, lease or use of reclaimed lands shall be used in accordance with the
provisions of Presidential Decree No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell
its reclaimed lands. PD No. 1085 merely transferred "ownership and administration" of
lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed
by PEA "shall belong to or be owned by PEA." EO No. 525 expressly states that PEA should
dispose of its reclaimed lands "in accordance with the provisions of Presidential Decree
No. 1084," the charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire,
administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands . . .
owned, managed, controlled and/or operated by the government." 87 (Italics supplied)
There is, therefore, legislative authority granted to PEA to sell its lands, whether
patrimonial or alienable lands of the public domain. PEA may sell to private
parties its patrimonial properties in accordance with the PEA charter free from
constitutional limitations. The constitutional ban on private corporations from acquiring
alienable lands of the public domain does not apply to the sale of PEA's patrimonial
lands.
PEA may also sell its alienable or disposable lands of the public domain to private
individuals since, with the legislative authority, there is no longer any statutory
prohibition against such sales and the constitutional ban does not apply to individuals.
PEA, however, cannot sell any of its alienable or disposable lands of the public
domain to private corporations since Section 3, Article XII of the 1987 Constitution
expressly prohibits such sales. The legislative authority bene@ts only individuals.
Private corporations remain barred from acquiring any kind of alienable land of
the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be
transferred by PEA to the "contractor or his assignees" (Italics supplied) would not apply
to private corporations but only to individuals because of the constitutional ban.
Otherwise, the provisions of PD No. 1085 would violate both the 1973 and 1987
Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classi@ed as alienable or disposable lands
open to disposition, and further declared no longer needed for public service, PEA would
have to conduct a public bidding in selling or leasing these lands. PEA must observe the
provisions of Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of
a law exempting PEA from holding a public auction. 88 Special Patent No. 3517 expressly
states that the patent is issued by authority of the Constitution and PD No.
1084,
"supplemented by Commonwealth Act No. 141, as amended." This is an acknowledgment
that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands of
the public domain unless otherwise provided by law. Executive Order No. 654, 89 which
authorizes PEA "to determine the kind and manner of payment for the transfer" of
its assets and properties, does not exempt PEA from the requirement of public auction.
EO No. 654 merely authorizes PEA to decide the mode of payment, whether in kind and in
installment, but does not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government
Auditing Code, the government is required to sell valuable government property through
public bidding. Section 79 of PD No. 1445 mandates that —
"Section 79. When government property has become unserviceable
for any cause, or is no longer needed, it shall, upon application of the
oJcer accountable therefor, be inspected by the head of the agency or
his duly authorized representative in the presence of the auditor concerned
and, if found to be valueless or unsaleable, it may be destroyed in their
presence. If found to be valuable, it may be sold at public auction to
the highest bidder under the supervision of the proper committee on
award or similar body in the presence of the auditor concerned or other
authorized representative of the Commission, after advertising by printed
notice in the OJcial Gazette, or for not less than three consecutive days in
any newspaper of general circulation, or where the value of the property
does not warrant the expense of publication, by notices posted for a like
period in at least three public places in the locality where the property is to
be sold. In the event that the public auction fails, the property may be sold
at a private sale at such price as may be @xed by the same
committee or body concerned and approved by the Commission."
It is only when the public auction fails that a negotiated sale is allowed, in which case
the Commission on Audit must approve the selling price. 90 The Commission on Audit
implements Section 79 of the Government Auditing Code through Circular No. 89-296
91 dated January 27, 1989. This circular emphasizes that government assets must be
disposed of only through public auction, and a negotiated sale can be resorted to only
in case of "failure of public auction."
At the public auction sale, only Philippine citizens are quali@ed to bid for PEA's
reclaimed foreshore and submerged alienable lands of the public domain.
Private corporations are barred from bidding at the auction sale of any kind of
alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December
10, 1991. PEA imposed a condition that the winning bidder should reclaim another 250
hectares of submerged areas to regularize the shape of the Freedom Islands, under a
60-40 sharing of the additional reclaimed areas in favor of the winning bidder. 92 No
one, however, submitted a bid. On December 23, 1994, the Government
Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation,
without need of another public bidding, because of the failure of the public
bidding on December 10, 1991. 93
However, the original JVA dated April 25, 1995 covered not only the Freedom
Islands and the additional 250 hectares still to be reclaimed, it also granted an option
to AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract,
enlarged the reclamation area to 750 hectares. 94 The failure of public bidding
on December 10, 1991, involving only 407.84 hectares, 95 is not a valid justi@cation
for a negotiated sale of 750 hectares, almost double the area publicly auctioned.
Besides,
the failure of public bidding happened on December 10, 1991, more than three years
before the signing of the original JVA on April 25, 1995. The economic situation in the
country had greatly improved during the intervening period.

Reclamation under the BOT Law and the Local Government

Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is
absolute and clear: "Private corporations or associations may not hold such alienable
lands of the public domain except by lease, . . . ." Even Republic Act No. 6957 ("BOT
Law," for brevity), cited by PEA and AMARI as legislative authority to sell reclaimed
lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957
states —
"Sec. 6. Repayment Scheme. — For the @nancing,
construction, operation and maintenance of any infrastructure projects
undertaken through the build-operate-and-transfer arrangement or any of
its variations pursuant to the provisions of this Act, the project proponent . .
. may likewise be repaid in the form of a share in the revenue of the project
or other non-monetary payments, such as, but not limited to, the grant of a
portion or percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land: . . . ." (Italics
supplied)
A private corporation, even one that undertakes the physical reclamation of a
government BOT project, cannot acquire reclaimed alienable lands of the public
domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI,
authorizes local governments in land reclamation projects to pay the contractor
or developer in kind consisting of a percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance, Operation, and
Management of Infrastructure Projects by the Private

Sector. . . . xxx xxx xxx

In case of land reclamation or construction of industrial estates,

the repayment plan may consist of the grant of a portion or
percentage of the reclaimed land or the industrial estate constructed."
Although Section 302 of the Local Government Code does not contain a proviso similar
to that of the BOT Law, the constitutional restrictions on land ownership
automatically apply even though not expressly mentioned in the Local Government
Code.
Thus, under either the BOT Law or the Local Government Code, the contractor
or developer, if a corporate entity, can only be paid with leaseholds on portions of the
reclaimed land. If the contractor or developer is an individual, portions of the
reclaimed land, not exceeding 12 hectares 96 of non-agricultural lands, may be
conveyed to him in ownership in view of the legislative authority allowing such
conveyance. This is the only way these provisions of the BOT Law and the Local
Government Code can avoid a direct collision with Section 3, Article XII of the 1987
Constitution.
Registration of lands of the public domain
 Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed
lands to public respondent PEA transformed such lands of the public domain to private
lands." This theory is echoed by AMARI which maintains that the "issuance of
the
special patent leading to the eventual issuance of title takes the subject land away
from the land of public domain and converts the property into patrimonial or
private property." In short, PEA and AMARI contend that with the issuance of Special
Patent No. 3517 and the corresponding certi@cates of titles, the 157.84 hectares
comprising the Freedom Islands have become private lands of PEA. In support of their
theory, PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato, 97 where the Court held —
"Once the patent was granted and the corresponding certi@cate
of title was issued, the land ceased to be part of the public
domain and became private property over which the Director of
Lands has neither control nor jurisdiction."

2. Lee Hong Hok v. David, 98 where the Court declared —

"After the registration and issuance of the certi@cate and
duplicate certi@cate of title based on a public land patent, the land
covered thereby automatically comes under the operation of Republic
Act 496 subject to all the safeguards provided therein."

3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas, 99 where the

Court ruled —
"While the Director of Lands has the power to review
homestead patents, he may do so only so long as the land remains part
of the public domain and continues to be under his exclusive
control; but once the patent is registered and a certi@cate of title is
issued, the land ceases to be part of the public domain and becomes
private property over which the Director of Lands has neither control
nor jurisdiction."

4. Manalo v. Intermediate Appellate Court, 100 where the Court held —

"When the lots in dispute were certi@ed as disposable on May 19,
1971, and free patents were issued covering the same in favor
of the private respondents, the said lots ceased to be part of the
public domain and, therefore, the Director of Lands lost jurisdiction
over the same."

5. Republic v. Court of Appeals, 101 where the Court stated —

"Proclamation No. 350, dated October 9, 1956, of
President Magsaysay legally effected a land grant to the Mindanao
Medical Center, Bureau of Medical Services, Department of Health, of
the whole lot, validly suJcient for initial registration under the Land
Registration Act. Such land grant is constitutive of a 'fee simple'
title or absolute title in favor of petitioner Mindanao Medical
Center. Thus, Section 122 of the Act, which governs the registration
of grants or patents involving public lands, provides that
'Whenever public lands in the Philippine Islands belonging to the
Government of the United States or to the Government of the
Philippines are alienated, granted or conveyed to persons or to public
or private corporations, the same shall be brought forthwith
under the operation of this Act (Land Registration Act, Act 496) and
shall become registered lands."
 The @rst four cases cited involve petitions to cancel the land patents and
the corresponding certi@cates of titles issued to private parties. These four cases
uniformly
hold that the Director of Lands has no jurisdiction over private lands or that upon
issuance of the certi@cate of title the land automatically comes under the Torrens
System. The @fth case cited involves the registration under the Torrens System of a 12.8-
hectare public land granted by the National Government to Mindanao Medical Center, a
government unit under the Department of Health. The National Government transferred
the 12.8-hectare public land to serve as the site for the hospital buildings and other
facilities of Mindanao Medical Center, which performed a public service. The Court
aJrmed the registration of the 12.8- hectare public land in the name of Mindanao Medical
Center under Section 122 of Act No.
496. This @fth case is an example of a public land being registered under Act No. 496
without the land losing its character as a property of public dominion.
In the instant case, the only patent and certi@cates of title issued are those in the
name of PEA, a wholly government owned corporation performing public as well
as proprietary functions. No patent or certi@cate of title has been issued to any private
party. No one is asking the Director of Lands to cancel PEA's patent or certificates of
title. In fact, the thrust of the instant petition is that PEA's certi@cates of title should
remain with PEA, and the land covered by these certi@cates, being alienable lands of
the public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in
the registrant private or public ownership of the land. Registration is not a mode of
acquiring ownership but is merely evidence of ownership previously conferred by
any of the recognized modes of acquiring ownership. Registration does not give the
registrant a better right than what the registrant had prior to the registration. 102 The
registration of lands of the public domain under the Torrens system, by itself, cannot
convert public lands into private lands. 103
Jurisprudence holding that upon the grant of the patent or issuance of the
certi@cate of title the alienable land of the public domain automatically becomes private
land cannot apply to government units and entities like PEA. The transfer of the Freedom
Islands to PEA was made subject to the provisions of CA No. 141 as expressly stated in
Special Patent No. 3517 issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of
the Philippines and in conformity with the provisions of Presidential Decree
No. 1084, supplemented by Commonwealth Act No. 141, as amended,
there are hereby granted and conveyed unto the Public Estates Authority
the aforesaid tracts of land containing a total area of one million nine
hundred @fteen thousand eight hundred ninety four (1,915,894) square
meters; the technical description of which are hereto attached and made an
integral part hereof." (Italics supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not
covered by PD No. 1084. Section 60 of CA No. 141 prohibits, "except when authorized by
Congress," the sale of alienable lands of the public domain that are transferred
to government units or entities. Section 60 of CA No. 141 constitutes, under Section 44 of
PD No. 1529, a "statutory lien affecting title" of the registered land even if not annotated
on the certi@cate of title. 104 Alienable lands of the public domain held by government
entitles under Section 60 of CA No. 141 remain public lands because they cannot be
alienated or encumbered unless Congress passes a law authorizing their disposition.
Congress, however, cannot authorize the sale to private corporations of reclaimed
alienable lands of the public domain because of the constitutional ban. Only individuals
can bene@t from such law.
 The grant of legislative authority to sell public lands in accordance with Section 60
of CA No. 141 does not automatically convert alienable lands of the public domain into
private or patrimonial lands. The alienable lands of the public domain must be
transferred to qualified private parties, or to government entities not tasked to dispose
of public lands, before these lands can become private or patrimonial lands. Otherwise,
the constitutional ban will become illusory if Congress can declare lands of the public
domain as private or patrimonial lands in the hands of a government agency tasked to
dispose of public lands. This will allow private corporations to acquire directly from
government agencies limitless areas of lands which, prior to such law, are concededly
public lands.
Under EO No. 525, PEA became the central implementing agency of the National
Government to reclaim foreshore and submerged areas of the public domain. Thus, EO No.
525 declares that —
"EXECUTIVE ORDER NO. 525

Designating the Public Estates Authority as the Agency Primarily Responsible

for all Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or
being proposed to be undertaken in various parts of the country which
need to be evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to
the Government's declared policy to provide for a coordinated,
economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of
areas shall be limited to the National Government or any person authorized
by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National
Government which shall ensure a coordinated and integrated approach in
the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates
Authority as a government corporation to undertake reclamation of lands and
ensure their maximum utilization in promoting public welfare and interests;
and
Whereas, Presidential Decree No. 1416 provides the President
with continuing authority to reorganize the national government including
the transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution
and pursuant to Presidential Decree No. 1416, do hereby order and direct
the following:
Section 1. The Public Estates Authority (PEA) shall be
primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government. All
reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity;
Provided, that, reclamation projects of any national government agency or
entity authorized under its charter shall be undertaken in consultation with
the PEA upon approval of the President.
 xxx xxx
xxx."

As the central implementing agency tasked to undertake reclamation

projects nationwide, with authority to sell reclaimed lands, PEA took the place of
DENR as the government agency charged with leasing or selling reclaimed lands of the
public domain. The reclaimed lands being leased or sold by PEA are not private lands, in
the same manner that DENR, when it disposes of other alienable lands does not dispose of
private lands but alienable lands of the public domain. Only when quali@ed private
parties acquire these lands will the lands become private lands. In the hands of the
government agency tasked and authorized to dispose of alienable of disposable lands of
the public domain, these lands are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA " shall hold lands of the public
domain" as well as "any and all kinds of lands." PEA can hold both lands of the public
domain and private lands. Thus, the mere fact that alienable lands of the public domain
like the Freedom Islands are transferred to PEA and issued land patents or certi@cates of
title in PEA's name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to
PEA as private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain. PEA
will simply turn around, as PEA has now done under the Amended JVA, and transfer
several hundreds of hectares of these reclaimed and still to be reclaimed lands to a single
private corporation in only one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution which was
intended to diffuse equitably the ownership of alienable lands of the public
domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the
public domain since PEA can "acquire . . . any and all kinds of lands." This will open the
Qoodgates to corporations and even individuals acquiring hundreds of hectares of
alienable lands of the public domain under the guise that in the hands of PEA these lands
are private lands. This will result in corporations amassing huge landholdings never before
seen in this country — creating the very evil that the constitutional ban was designed to
prevent. This will completely reverse the clear direction of constitutional development in
this country. The 1935 Constitution allowed private corporations to acquire not more than
1,024 hectares of public lands. 105 The 1973 Constitution prohibited private corporations
from acquiring any kind of public land, and the 1987 Constitution has
unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No.
496 or PD No. 1529, automatically become private lands is contrary to existing
laws. Several laws authorize lands of the public domain to be registered under the
Torrens System or Act No. 496, now PD No. 1529, without losing their character as public
lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively, provide
as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands
belonging to the . . . Government of the Philippine Islands are alienated,
granted, or conveyed to persons or the public or private corporations, the
same shall be brought forthwith under the operation of this Act and shall
become registered lands."
 PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public land is
by the Government alienated, granted or conveyed to any person, the
same shall be brought forthwith under the operation of this Decree." (Italics
supplied)

Based on its legislative history, the phrase "conveyed to any person" in Section 103 of
PD No. 1529 includes conveyances of public lands to public corporations.
Alienable lands of the public domain "granted, donated, or transferred to a
province, municipality, or branch or subdivision of the Government," as provided in
Section 60 of CA No. 141, may be registered under the Torrens System pursuant to
Section 103 of PD No.
1529. Such registration, however, is expressly subject to the condition in Section 60 of CA
No. 141 that the land "shall not be alienated, encumbered or otherwise disposed of in a
manner affecting its title, except when authorized by Congress." This provision refers to
government reclaimed, foreshore and marshy lands of the public domain that have been
titled but still cannot be alienated or encumbered unless expressly authorized by
Congress. The need for legislative authority prevents the registered land of the
public domain from becoming private land that can be disposed of to qualified private
parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public
domain may be registered under the Torrens System. Section 48, Chapter 12, Book I of
the Code states —
"Sec. 48 OJcial Authorized to Convey Real Property. Whenever
real property of the government is authorized by law to be conveyed, the
deed of conveyance shall be executed in behalf of the government by the
following:
(1) ...

(2) For property belonging to the Republic of the

Philippines, but titled in the name of any political subdivision or of any
corporate agency or instrumentality, by the executive head of the
agency or instrumentality." (Italics supplied)

Thus, private property purchased by the National Government for expansion of a

public wharf may be titled in the name of a government corporation regulating port
operations in the country. Private property purchased by the National Government for
expansion of an airport may also be titled in the name of the government
agency tasked to administer the airport. Private property donated to a municipality
for use as a town plaza or public school site may likewise be titled in the name of the
municipality. 106 All these properties become properties of the public domain, and if
already registered under Act No. 496 or PD No. 1529, remain registered land. There is
no requirement or provision in any existing law for the de-registration of land from the
Torrens System.
Private lands taken by the Government for public use under its own power
of eminent domain become unquestionably part of the public domain. Nevertheless,
Section
85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National
government new certi@cates of title covering such expropriated lands. Section 85 of PD
No. 1529 states —
 "Sec. 85 Land taken by eminent domain. Whenever any registered
land, or interest therein, is expropriated or taken by eminent domain,
the National Government, province, city or municipality, or any other
agency or instrumentality exercising such right shall @le for registration in
the proper Registry a certi@ed
 copy of the judgment which shall state de@nitely by an adequate
description, the particular property or interest expropriated, the number of
certi@cate of title, and the nature of the public use. A memorandum of the
right or interest taken shall be made on each certi@cate of title by the
Register of Deeds, and where the fee simple is taken, a new certi@cate
shall be issued in favor of the National Government, province, city,
municipality, or any other agency or instrumentality exercising such right for
the land so taken. The legal expenses incident to the memorandum of
registration or issuance of a new certi@cate of title shall be for the account
of the authority taking the land or interest therein." (Italics supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively
private or patrimonial lands. Lands of the public domain may also be
registered pursuant to existing laws.

AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the
Freedom Islands or of the lands to be reclaimed from submerged areas of Manila Bay. In
the words of AMARI, the Amended JVA "is not a sale but a joint venture with a stipulation
for reimbursement of the original cost incurred by PEA for the earlier reclamation and
construction works performed by the CDCP under its 1973 contract with the Republic."
Whether the Amended JVA is a sale or a joint venture, the fact remains that the
Amended JVA requires PEA to "cause the issuance and delivery of the certi@cates of title
conveying AMARI's Land Share on the name of AMARI." 107
This stipulation still contravenes Section 3, Article XII of the 1987
Constitution which provides that private corporations "shall not hold such alienable lands
of the public domain except by lease." the transfer of title and ownership to AMARI
clearly means that AMARI will "hold' the reclaimed lands other than by lease. The
transfer of title and ownership is a "disposition" of the reclaimed lands, a transaction
considered a sale or alienation under CA No. 141, 108 the Government Auditing Code, 109
and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore
and submerged areas form part of the public domain and are inalienable. Lands
reclaimed from foreshore and submerged areas also form part of the public domain and
are also inalienable, unless converted pursuant to law into alienable or disposable
lands of the public domain. Historically, lands reclaimed by the government are sui
generis, not available for sale to private parties unlike other alienable public lands.
Reclaimed lands retain their inherent potential as areas for public use or public service.
Alienable lands of the public domain, increasingly becoming scarce natural resources, are
to be distributed equitably among our ever-growing population. To insure such equitable
distribution, the
1973 and 1987 Constitutions have barred private corporations from acquiring any kind of
alienable land of the public domain. Those who attempt to dispose of inalienable natural
resources of the State, or seek to circumvent the conditional ban on alienation of lands of
the public domain to private corporations, do so at their own risks.
We can now summarize our conclusions as follows;
1. The 157.84 hectares of reclaimed lands comprising the
Freedom Islands, now covered by certi@cates of title in the name of
PEA, are alienable lands of the public domain. PEA may lease these
lands to private corporations but may not sell or transfer ownership
of these lands to private corporations. PEA may only sell these
lands to
 Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain
inalienable natural resources of the public domain until classi@ed as
alienable or disposable lands open to disposition and declared no
longer needed for public service. The government can make
such classi@cation and declaration only after PEA has reclaimed
these submerged areas. Only then can these lands qualify as
agricultural lands of the public domain, which are the only natural
resources the government can alienate. In their present state, the
592.15 hectares of submerged areas are inalienable and outside
the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private
corporation, ownership of 77.34 hectares 110 of the Freedom Islands,
such transfer is void for being contrary to Section 3, Article XII of the
1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of
290.156 hectares 111 of still submerged areas of Manila Bay, such
transfer is void for being contrary to Section 2, Article XII of the 1987
Constitution which prohibits the alienation of natural resources other
than agricultural lands of the public domain. PEA may reclaim these
submerged areas. Thereafter, the government can classify the
reclaimed lands as alienable or disposable, and further declare them
no longer needed for public service. Still, the transfer of such
reclaimed alienable lands of the public domain to AMARI will be void
in view of Section 3, Article XII of the 1987 Constitution which
prohibits private corporations from acquiring any kind of
alienable land of the public domain.
Clearly the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. under Article 1409 112 of the Civil Code, contracts whose "object
or purpose is contrary to law," or whose "object is outside the commerce of men," are
"inexistent and void from the beginning." The Court must perform its duty to defend
and uphold the Constitution, and therefore declares the Amended JVA null and
void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether
the
Amended JVA is grossly disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is no necessity
to rule on this last issue. Besides, the Court is not the trier of facts, and this last
issue involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and
Amari Coastal Bay Development Corporation are PERMANENTLY ENJOINED from
implementing the Amended Joint Venture Agreement which is hereby declared NULL and
VOID ab initio.

SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing,
Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez and Corona, JJ., concur.

Footnotes

1. Section 4 of PD No. 1084.

2. PEA's Memorandum dated August 4, 1999, p. 3.

3. PEA's Memorandum, supra note 2 at 7. PEA's Memorandum quoted extensively, in

its Statement of Facts and the Case, the Statement of Facts in Senate Committee
Report No. 560 dated September 16, 1997.

4. In Opinion No. 330 dated December 23, 1994, the Government Corporate Counsel,
citing
COA Audit Circular No. 89-296, advised PEA that PEA could negotiate the sale of the
157.84-hectare Freedom Islands in view of the failure of the public bidding held
on December 10, 1991 where there was not a single bidder. See also Senate
Committee Report No. 560, p. 12.
5. PEA's Memorandum, supra note 2 at 9.

6. Ibid.
7. The existence of this report is a matter of judicial notice pursuant to Section 1,
Rule 129 of the Rules of Court which provides, "A court shall take judicial
notice, without the introduction of evidence, of . . . the official acts of the
legislature . . . ."
8. Teofisto Guingona, Jr.

9. Renato Cayetano.

10. Virgilio C. Abejo.

11. Report and Recommendation of the Legal Task Force, Annex "C",
AMARI's
Memorandum dated June 19,
1999.

12. AMARI's Comment dated June 24, 1998, p. 3; Rollo, p. 68.

13. AMARI @led three motions for extension of time to @le comment (Rollo, pp. 32, 38,
48);
while PEA filed nine motions for extension of time (Rollo, pp. 127,
139).

14. Petitioner's Memorandum dated July 6, 1999, p. 42.

15. Represented by the OJce of the Solicitor General, with Solicitor General Ricardo P.
Galvez, Assistant Solicitor General Azucena R. Balanon-Corpuz, and Associate
Solicitor
Raymund I. Rigodon signing PEA's
Memorandum.

16. Represented by Azcuna Yorac Arroyo & Chua Law OJces, and Romulo Mabanta Sayoc
& De los Angeles Law
Offices.
17. Salonga v. Paño, 134 SCRA 438 (1985); Gonzales v. Marcos, 65 SCRA 624 (1975);
Aquino v. Enrile, 59 SCRA 183 (1974); Dela Camara v. Enage, 41 SCRA 1
(1971).

18. Section 11, Article XIV.

19. Manila Electric Co. v. Judge F. Castro-Bartolome , 114 SCRA 799 (1982); Republic
v. CA and Iglesia, and Republic v. Cendana and Iglesia ni Cristo, 119 SCRA
449 (1982); Republic v. Villanueva and Iglesia ni Cristo, 114 SCRA 875 (1982);
Director of Lands v. Lood, 124 SCRA 460 (1983); Republic v. Iglesia ni Cristo, 128
SCRA 44 (1984); Director of
 Lands v. Hermanos y Hermanas de Sta. Cruz de Mayo, Inc., 141 SCRA 21
(1986); Director of Lands v. IAC and Acme Plywood & Veneer Co., 146 SCRA
509 (1986); Republic v. IAC and Roman Catholic Bishop of Lucena, 168 SCRA 165
(1988); Natividad v. CA, 202 SCRA 493 (1991); VillaQor v. CA and Nasipit
Lumber Co., 280 SCRA 297 (1997). In Ayog v. Cusi, 118 SCRA 492 (1982), the Court
did not apply the constitutional ban in the 1973 Constitution because the applicant
corporation, Biñan Development Co., Inc., had fully complied with all its
obligations and even paid the full purchase price before the effectivity of the
1973 Constitution, although the sales patent was issued after the 1973 Constitution
took effect.

20. PD No. 1073.

21. Annex "B", AMARI's Memorandum dated June 19, 1999, Section 5.2 (c) and (e) of the
Amended JVA, pp. 16-
17.

22. Chavez v. PCGG, 299 SCRA 744 (1998).

23. 136 SCRA 27 (1985).

24. Article 2 of the Civil Code (prior to its amendment by EO No. 200) provided as
follows: "Laws shall take effect after @fteen days following the completion of their
publication in the Official Gazette, unless it is provided otherwise, . . . ."
25. Section 1 of CA No. 638 provides as follows: "There shall be published in the OJcial
Gazette all important legislative acts and resolutions of the Congress of the
Philippines; all executive and administrative orders and proclamations, except
such as have no general applicability; . . . ."
26. Section 79 of the Government Auditing Codes provides as follows: "When
government property has become unserviceable for any cause, or is no longer
needed, it shall, upon application of the officer accountable therefor, be inspected
by the head of the agency or his duly authorized representative in the presence of
the auditor concerned and, if found to be valueless or unsaleable, it may be
destroyed in their presence. If found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of the proper committee on
award or similar body in the presence of the auditor concerned or other authorized
representative of the Commission, after advertising by printed notice in the OJcial
Gazette, or for not less than three consecutive days in any newspaper of general
circulation, or where the value of the property does not warrant the expense of
publication, by notices posted for a like period in at least three public places in
the locality where the property is to be sold. In the event that the public auction
falls, the property may be sold at a private sale at such price as may be @xed
by the same committee or body concerned and approved by the Commission."

27. Paat v. Court of Appeals, 266 SCRA 167 (1997); Quisumbing v. Judge Gumban, 193
SCRA 520 (1991); Valmonte v. Belmonte, Jr., 170 SCRA 256
(1989).

28. See note 22.

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 29. Section 1, Article XI of the 1987 Constitution states as follows: "Public oJce is a
public trust. Public oJcers and employees must at all times be accountable to the
people, serve them with utmost responsibility, integrity, loyalty, and
eJciency, act with patriotism and justice, and lead modest lives.
30. 170 SCRA 256 (1989).

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 31. See note 22.

32. Record of the Constitutional Commission, Vol. V, pp. 24-25. (1986).

33. Supra, Note 22.

34. Ibid.
35. Legaspi v. Civil Service Commission, 150 SCRA 530 (1987).
36. Almonte v. Vasquez, 244 SCRA 286 (1995).
37. See Note 22.

38. Chavez v. PCGG, see note 22; Aquino-Samiento v. Morato, 203 SCRA 515 (1991).
39. Almonte v. Vasquez, see note 36.
40. People's Movement for Press Freedom, et al. v. Hon. Raul Manglapus, G.R. No.
84642,
En Banc Resolution dated April 13, 1988; Chavez v. PCGG, see note 22.
41. Section 270 of the National Internal Revenue Code punishes any oJcer or
employee of the Bureau of Internal Revenue who divulges to any person, except as
allowed by law, information regarding the business, income, or estate of any
taxpayer, the secrets, operation, style of work, or apparatus of any manufacturer
or producer, or con@dential information regarding the business of any taxpayer,
knowledge of which was acquired by him in the discharge of his oJcial duties.
Section 14 of R.A. No. 8800 (Safeguard Measures Act) prohibits the release to the
public of con@dential information submitted in evidence to the Tariff Commission.
Section 3 (n) of R.A. No. 8504 (Philippine AIDS Prevention and Control Act)
classi@es as con@dential the medical records of HIV patients. Section 6 (j)
of R.A. No. 8043 (Inter-Country Adoption Act) classi@es as con@dential the
records of the adopted child, adopting parents, and natural parents. Section 94
(f) of R.A. No. 7942 (Philippine Mining Act) requires the Department of
Environment and Natural Resources to maintain the con@dentiality of
con@dential information supplied by contractors who are parties to mineral
agreements or @nancial and technical assistance agreements.
42. T he Recopilacion de Leyes de las Indias declared that: "We, having
acquired full sovereignty over the Indies, and all lands, territories, and
possessions not heretofore ceded away by our royal predecessors, or by us, or in
our name, still pertaining to the royal crown and patrimony, it is our will that all
lands which are held without proper and true deeds of grant be restored to us
according as they belong to us, in order that after reserving before all what to us or
to our viceroys, audiencias, and governors may seem necessary for public squares,
ways, pastures, and commons in those places which are peopled, taking into
consideration not only their present condition, but also their future and their
probable increase, and after distributing to the natives what may be necessary for
tillage and pasturage, con@rming them in what they now have and giving them
more if necessary, all the rest of said lands may remain free and unencumbered for
us to dispose of as we may wish." See concurring opinion of Justice Reynato S.
Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199 (1998).

Philippine, 546; 'Where such possessors shall not be able to produce title deeds, it
shall
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 43. Cariño v. Insular Government, 41 Phil. 935 (1909). The exception mentioned in
Cariño, referring to lands in the possession of an occupant and of his predecessors-
in-interest, since time immemorial, is actually a species of a grant by the State.
The United States Supreme Court, speaking through Justice Oliver Wendell Holmes,
Jr., declared in Cariño: "Prescription is mentioned again in the royal cedula of
October 15, 1754, cited in 3

Philippine, 546; 'Where such possessors shall not be able to produce title deeds, it
shall
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 be suJcient if they shall show that ancient possession, as a valid title by
prescription.' It may be that this means possession from before 1700; but, at all
events, the principle is admitted. As prescription, even against the Crown lands,
was recognized by the laws of Spain, we see no suJcient reason for hesitating to
admit that it was recognized in the Philippines in regard to lands over which Spain
had only a paper sovereignty." See also Republic v. Lee, 197 SCRA 13 (1991).
44. Article 1 of the Spanish Law of Waters of 1866.

45. Ignacio v. Director of Lands, 108 Phil. 335 (1960); Joven v. Director of Lands, 93
Phil.
134 (1953); Laurel v. Garcia, 187 SCRA 797 (1990). See concurring opinion of Justice
Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA
199 (1998).

46. Act No. 926 on October 7, 1903, was also titled the Public Land Act. This Act,
however, did not cover reclaimed lands. Nevertheless, Section 23 of this Act
provided as follows: ".
. . In no case may lands leased under the provisions of this chapter be taken so as
to gain control of adjacent land, water, stream, shore line, way, roadstead, or
other valuable right which in the opinion of the Chief of the Bureau of Public Lands
would be prejudicial to the interests of the public."
47. Section 10 of Act No. 2874 provided as follows: "The words "alienation,"
"disposition," or "concession" as used in this Act, shall mean any of the methods
authorized by this Act for the acquisition, lease, use, or bene@t of the lands of the
public domain other than timber or mineral lands."
48. Title II of Act No. 2874 governed alienable lands of the public domain for
agricultural purposes, while Title III of the same Act governed alienable lands of
the public domain for non-agricultural purposes.
49. Section 57 of Act No. 2874 provided as follows: ". . . ; but the land so granted,
donated, or transferred to a province, municipality, or branch or subdivision of the
Government shall not be alienated, encumbered, or otherwise disposed of in a
manner affecting its title, except when authorized by the legislature; . . . ."
50. Krivenko v. Register of Deeds, 79 Phil. 461 (1947).
51. Section 2 of CA No. 141 states as follows: "The provisions of this Act shall apply to
the lands of the public domain; but timber and mineral lands shall be governed by
special laws and nothing in this Act provided shall be understood or construed to
change or modify the administration and disposition of the lands commonly called
"friar lands" and those which, being privately owned, have reverted to or become
the property of the Commonwealth of the Philippines, which administration
and disposition shall be governed by the laws at present in force or which may
hereafter be enacted."
52. Like Act No. 2874, Section 10 of CA No. 141 de@ned the terms
"alienation" and "disposition" as follows: "The words "alienation," "disposition," or
"concession" as used in this Act, shall mean any of the methods authorized by this
Act for the acquisition, lease, use, or benefit of the lands of the public domain
other than timber or mineral lands."

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 53. R.A. No. 6657 has suspended the authority of the President to reclassify
forest or mineral lands into agricultural lands. Section 4 (a) of RA No. 6657
(Comprehensive Agrarian Reform Law of 1988) states, "No reclassi@cation of forest
or mineral lands to agricultural lands shall be undertaken after the approval
of this Act until Congress, taking into account ecological, developmental and
equity considerations, shall have delimited by law, the specific limits of the
public domain.

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54. Covering Sections 58 to 68 of CA No. 141.

55. 299 SCRA 199 (1998).

56. Section 1, Article XIII of the 1935 Constitution limited the disposition and
utilization of public agricultural lands to Philippine citizens or to corporations at
least sixty percent owned by Philippine citizens. This was, however, subject
to the original Ordinance appended to the 1935 Constitution stating, among
others, that until the withdrawal of United States sovereignty in the Philippines,
"Citizens and corporations of the United States shall enjoy in the Commonwealth
of the Philippines all the civil rights of the citizens and corporations,
respectively, thereof."
57. Section 44 of PD No. 1529 (previously Section 39 of Act No. 496) provides that
"liens, claims or rights arising or existing under the laws and the Constitution of the
Philippines which are not by law required to appear of record in the Registry of
Deeds in order to be valid against subsequent purchasers or encumbrancers of
record" constitute statutory liens affecting the title.
58. RA No. 730, which took effect on June 18, 1952, authorized the private sale of
home lots to actual occupants of public lands not needed for public service. Section
1 of RA No. 730 provided as follows: "Notwithstanding the provisions of Sections 61
and 67 of Commonwealth Act No. 141, as amended by RA No. 293, any Filipino
citizen of legal age who is not the owner of a home lot in the municipality or city in
which he resides and who had in good faith established his residence on a parcel of
land of the Republic of the Philippines which is not needed for public service,
shall be given preference to purchase at a private sale of which reasonable
notice shall be given to him, not more than one thousand square meters at a price
to be @xed by the Director of Lands with the approval of the Secretary of
Agriculture and Natural Resources. . . ." In addition, on June
16, 1948, Congress enacted R.A. No. 293 allowing the private sale of marshy
alienable or
disposable lands of the public domain to lessees who have improved and utilized
the same as farms, @shponds or other similar purposes for at least @ve years from
the date of the lease contract with the government. R.A. No. 293, however,
did not apply to marshy lands under Section 56 (c), Title III of CA No. 141 which
refers to marshy lands leased for residential, commercial, industrial or other non-
agricultural purposes.
59. See note 49.

60. See note 60.

61. Republic Real Estate Corporation v. Court of Appeals, see note 56.
62. Ibid.
63. Insular Government v. Aldecoa, 19 Phil. 505 (1911); Government v. Cabangis, 53
Phil.
112 (1929).

64. 118 SCRA 492 (1982).

65. Annex "B", AMARI's Memorandum, see note 2 at 1 & 2.

66. PEA's Memorandum, see note 6.

67. Ibid., p. 44.
68. See notes 9, 10 & 11.

69. Annex "C", p. 3, AMARI's Memorandum, see note 12 at 3.

70. This should read Article XII.

71. Section 8 of CA No. 141.

72. Emphasis supplied.

73. 187 SCRA 797 (1990).

74. Article 422 of the Civil Code states as follows: "Property of public dominion, when
no longer needed for public use or public service, shall form part of the patrimonial
property of the State."
75. AMARI's Comment dated June 24, 1998, p. 20; Rollo, p. 85.

76. Dizon v. Rodriguez, 13 SCRA 705 (1965); Republic v. Lat Vda. de Castillo, 163 SCRA
286 (1988).

77. Cariño v. Insular Government, 41 Phil. 935 (1909).

78. Proclamation No. 41, issued by President Ramon Magsaysay on July 5, 1954,
reserved for "National Park purposes" 464.66 hectares of the public domain in
Manila Bay "situated in the cities of Manila and Pasay and the municipality of
Parañaque, Province of Rizal, Island of Luzon," which area, as described in detail in
the Proclamation, is " [B]ounded on the North, by Manila Bay; on the East, by
Dewey Boulevard; and on the south and west, by Manila Bay." See concurring
opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of
Appeals, 299 SCRA 1999 (1998). Under Sections 2 and 3, Article XII of the 1987
Constitution, "national parks" are inalienable natural resources of the State.

79. Fifth Whereas clause of EO No. 525.

80. Section 4, Chapter I, Title XIV, Book IV.

81. Section 6 of CA No 141 provides as follows: "The President, upon the

recommendation of the Secretary of Agriculture and Commerce, shall from time to
time classify the lands of the public domain into — (a) Alienable or disposable, . . .
."

82. Section 7 of CA No. 141 provides as follows: "For purposes of the administration
and disposition of alienable or disposable public lands, the President, upon
recommendation by the Secretary of Agriculture and Commerce, shall from time to
time declare what lands are open to disposition or concession under this Act."

83. On "Lands for Residential, Commercial, or Industrial and other Similar Purposes."

84. RA No. 293, enacted on June 16, 1948, authorized the sale of marshy lands under
certain conditions. Section 1 of RA No. 293 provided as follows: "The provisions
of section sixty-one of Commonwealth Act Numbered One hundred and forty-one to
the contrary notwithstanding, marshy lands and lands under water bordering on
shores or banks or navigable lakes or rivers which are covered by subsisting
leases or leases which may hereafter be duly granted under the provisions of the
said Act and are already improved and have been utilized for farming, @shpond, or
similar purposes for at least
@ve years from the date of the contract of lease, may be sold to the lessees
thereof under the provisions of Chapter Five of the said Act as soon as the
 President, upon recommendation of the Secretary of Agriculture and Natural
Resources, shall declare that the same are not necessary for the public service."
85. PEA's Memorandum, see note 2 at 45.
 86. See note 73.

87. Section 4 (b) of PD No. 1084.

88. R.A. No. 730 allows the private sale of home lots to actual occupants of public
lands.
See note
63.

89. Issued on February 26, 1981.

90. While PEA claims there was a failure of public bidding on December 10, 1991,
there is no showing that the Commission on Audit approved the price or
consideration stipulated in the negotiated Amended JVA as required by Section 79
of the Government Auditing Code. Senate Committee Report No. 560 did not
discuss this issue.
91. Paragraph 2 (a) of COA Circular No. 89-296, on "Sale Thru Negotiation," states that
disposal through negotiated sale may be resorted to if "[T]here was a failure of
public auction."
92. Senate Committee Report No. 560, Statement of Facts, p. 7, citing PEA
Board Resolution No. 835, as appearing in the Minutes of the PEA Board of Directors
Meeting held on May 30, 1991, per Certi@cation of Jaime T. De Veyra, Corporate
Secretary, dated June 11, 1991.
93. Opinion No. 330, citing COA Audit Circular No. 89-296. See note 5.

94. PEA's Memorandum, see note 2.

95. Senate Committee Report No: 560, pp. 7-8, citing the Minutes of Meeting of the
PEA Board of Directors held on December 19, 1991.
96. Section 3, Article XII of the 1987 Constitution provides as follows: ". . . Citizens of
the Philippines may . . . acquire not more than twelve hectares thereof by
purchase, homestead or grant." However, Section 6 of R.A. No. 6657
(Comprehensive Agrarian Reform Law) limits the ownership of "public or private
agricultural land" to a maximum of five hectares per person.
97. 96 Phil. 946 (1955).

98. 48 SCRA 372 (1977).

99. 168 SCRA 198 (1988).

100. 172 SCRA 795 (1989).

101. 73 SCRA 146 (1976).

102. Avila v. Tapucar, 201 SCRA 148 (1991).

103. Republic v. Ayala Cia, et al., 14 SCRA 259 (1965); Dizon v. Rodriguez, 13 SCRA
705 (1965).

104. Section 44 of PD No. 1529 states as follows: "Every registered owner

receiving a certi@cate of title in pursuance of a decree of registration, and
every subsequent purchaser of registered land taking a certi@cate of title for value
and in good faith, shall hold the same free from all encumbrances except those
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 noted on said certi@cate and any of the following encumbrances which may be
subsisting, namely: First. Liens, claims or rights arising or existing under the laws
and Constitution of the Philippines which are not by law required to appear of
record in the Registry of Deeds in order to be valid against subsequent purchasers
or encumbrancers of record. . . ." Under Section 103

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 of PD No. 1529, Section 44 applies to certi@cates of title issued pursuant to a
land patent granted by the government.
105. Section 2, Article XIII of the 1935 Constitution.

106. Harty v. Municipality of Victoria, 13 Phil. 152 (1909).

107. Annex "B", AMARI'S Memorandum, see note 21 at 16, Section 5.2 (c) of the
Amended
JVA.

108. Section 10 of CA No. 141 provides as follows:" Sec. 10. The words
"alienation," "disposition," or "concession" as used in this Act, shall mean any
of the methods authorized by this Act for the acquisition, lease, use, or bene@t of
the lands of the public domain other than timber or mineral lands."

109. Section 79 of the Government Auditing Code, which requires public auction in
the sale of the government assets, includes all kinds of disposal or divestment of
government assets. Thus, COA Audit Circular No. 86-264 dated October 16,
1986 speaks of guidelines (which) shall govern the general procedures on the
divestment or disposal of assets government-owned and/or controlled
corporations and their subsidiaries." Likewise, COA Audit Circular No. 89-296
dated January 27, speaks of guidelines (which) shall be observed and adhered to in
the divestment or disposal of property and other assets of all government
entities/instrumentalities" and that "divestment shall refer to the manner or
scheme of taking away, depriving, withdrawing of an authority, power or title."
These COA Circulars implement Section 79 of the Government Auditing Code.

110. The share of AMARI in the Freedom Islands is 77.34 hectares, which is 70 percent
of the net usable area of 110.49 hectares. The net usable area is the total land
area of the Freedom Islands less 30 percent allocated for common areas.
111. The share of AMARI in the submerged areas for reclamation is 290.129 hectares,
which is 70 percent of the net usable area of 414.47 hectares.
112. Article 1409 of the Civil Code provides as follows: "The following
contracts are inexistent and void from the beginning: (1) Those whose cause,
object or purpose is contrary to law; . . . ; (4) Those whose object is outside the
commerce of men; . . . ."